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Jun 14 - 02:55 PM

USD: Expecting USD Correction If FOMC Sticks To 50bps Hike At Tomorrow's Meeting - ING

By eFXdata  —  Jun 14 - 01:30 PM

ING Research discusses its expectations for tomorrow's FOMC June policy meeting. 

"The dollar strength continues to be fuelled by a re-pricing higher in Fed rate expectations. Markets have rushed to rapidly price in a 75bp rate hike by the Fed tomorrow, now attaching a nearly 100% implied probability to this scenario. We acknowledge 75bp is  looking increasingly likely and at this stage, it is not to be excluded that investors will continue to push their expectations even higher, and start considering a 100bp hike. The market-implied terminal rate for mid-2023 is now some 10-15bp above 4.0%, having risen around 70bp since last Thursday (before the US CPI report)," ING notes. 

"All this surely paves the way for a dollar correction tomorrow if the Fed sticks to its plan to hike by 50bp, but also shows that markets are increasingly comfortable with very hawkish Fed pricing, and evidence of sticky inflation over the coming months may well keep such hawkish pricing – and by extension, the dollar – well supported even if equities start to recover," ING adds. 

ING Research/Market Commentary


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