USD monthly currency outlook (1-3 Month)

USD fell steadily into the September 17 FOMC meeting, making a low after the unchanged rate decision, then spent the rest of the month recovering to end unchanged - both in DXY-terms and bilaterally against all of the major currencies. 

With insufficient new news by this month's meeting, the "live" meeting is December and the ~35% probability of a hike currently discounted is very similar to expectations for the September meeting, 2½ months prior to the event. So the start of Q4 is in many respects similar to the start of Q3 - the US domestic data are fine (notwithstanding one month's poor payrolls), economic surprises are balanced and the next important Fed meeting is priced as being in the balance. 

How USD trades for the rest of the year will largely be a reflection of how this probability evolves. Fed comments subsequent to the FOMC have consistently suggested a "default" position of a hike this year, the onus being on the news-flow to stop the Fed moving and this has continued after the disappointing September payrolls report. 

"Reflecting this view, USD is seemed slightly stronger into year-end and the uncertainty around this is high. The trading strategy will continue to look for ideas in the crosses, avoiding directional USD exposure", says RBC Capital Markets.