Credit Agricole CIB Research discusses its expectations for next week's FOMC policy meeting.
"Ahead of its December policy meeting, we expect the Fed to signal a faster pace of QE taper while the updated ‘dot plot’ could signal rate hikes starting in 2022. That being said, we further note that the US rates markets are already pricing in around three rate hikes in 2022, followed by another two in 2023. We therefore doubt that the Fed will be able to exceed the already hawkish market expectations," CACIB notes.
"We nevertheless maintain a contrastive outlook on the currency because we think that it can benefit from further recovery in UST yields on the back of recovering economic optimism, a more aggressive QE taper and a potential extension of the US debt ceiling," CACIB adds.