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Dec 15 - 09:55 AM

USD: Don’t Count Your Hawks Before They Hatch - Credit Agricole

By eFXdata  —  Dec 15 - 09:04 AM

Credit Agricole CIB Research discusses its expectations for today's FOMC policy meeting. 

"We note that the bar for a hawkish surprise today maybe too high with the US rates markets already pricing in around five rate hikes by the end of 2023. Should the Fed dot plot signal two rate hikes in 2022, followed by another two (or even three) in 2023 (as we would expect), this could still point at less aggressive and frontloaded tightening than expected by the markets at present," CACIB notes. 

"We think that a less hawkish Fed today could be a boon for risk sentiment and can weigh on the USD vs risk-correlated currencies. At the same time, the USD could remain supported vs low-yielding safe havens like the JPY and CHF if the UST yield curve bear steepens (using UST 2s10s) in the wake of the meeting," CACIB adds.

Crédit Agricole Research/Market Commentary


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