Given the fact that the U.S. dollar index is back up near its 2 ½ month high hit last Friday against a basket of other currencies , it would appear that traders were correct not to expect an interest rate hike from today’s FOMC meeting.
China Impacting Global Growth
One of the reasons why few expect a rate hike is the continuing economic slowdown in China, which is having far-reaching effects on global growth, including that of the U.S. However, the FOMC did indicate strongly that there could be an interest rate hike in December.
Here’s one analyst speaking about the Fed’s impact on Reuters.com:
“Heading in to the FOMC, it’s fair to say that market consensus is that there will be no change, but if there’s any risk, it would be toward a hike, so therefore, intuitively, if you needed to put your cash somewhere, your safest bet would be the dollar today,” said Bart Wakabayashi, head of foreign exchange for State Street Global Markets in Tokyo.
“Tomorrow, we could be looking at all different big figures in all different currencies,” he said. “But even though the U.S. numbers last night were quite bad, the dollar was still able to maintain support.”
Also in the news, the British pound is steadying after more economic bad news Again from Reuters: “The British pound steadied after it slipped to a two-week low on Tuesday after data showed Britain’s economy slowed more than expected in the third quarter, fuelling concern that a period of rapid expansion is coming to an end.”
We know now that there is no interest rate hike today, but there may be one come December. Make sure you stay on top of all developments by joining our webinars today (you can register on the schedule below).