FxWirePro: What to watch in FOMC meet ahead?

The U.S. Federal Reserve is in a hawkish mode. Since December 2015, the U.S. Federal Reserve has hiked rates seven times. It has hiked rates twice this year in unanimous voting and forecasted two more hikes over the remaining three meetings of the year.

FOMC will announce its September monetary policy decision today at 18:00 GMT.

The focus will be on the followings –

• Policy decision –Most of the analysts and economists expect the Fed to increase interest rates by 25 basis points. The market is pricing a 100 percent chance of a rate hike. So naturally, a rate hike alone would not be very bullish for the dollar. However, since the market and especially EM economies are worried about dollar liquidity, it might be bullish.
   
• FED’s monetary policy statement – The market would be looking for a clue to future rate hikes by assessing the tone of the statement.
   
• Fed projections - This is likely to be the most vital piece of document. The focus will be on participants’ projections of future rate hikes, as well as inflation, GDP, and unemployment rate. A faster growth forecast and higher inflation forecast will be positive for the dollar.

• For the interest rate projections, the focus will be on next year to see whether the Fed upgrades its projections from the current two rate hikes in 2019.

• Press Conference: Jerome Powell’s press conference is scheduled at 18:30 GMT.

The financial market is pretty convinced that the U.S. Federal Reserve would increase rates for the eighth time since 2015 and for the third time in 2018. The market is currently pricing a hike in December with 84 percent probability and confident of two more hikes in 2019.

The dollar index is currently trading at 94.32, up 0.2 percent for the day, so far. S&P500 is almost flat for the day, trading at 2916 area.