FX traders appear to be of a single mind and that is that the Federal Reserve Bank will finally lose “patience,” the word, and not just the sentiment, from its policy statements, and that it will announce later today the possibility of an imminent interest rate increase. If, indeed, the Fed does follow through on expectations, that would be the first rate hike in nearly nine years in the US, however anything less than a clear hint would likely prompt the Dollar’s sharp decline, to the benefit of its many peers, especially the Euro.
As reported at 9:04 am (GMT) in London, the EUR/USD was trading higher at $1.0611, dipping from the overnight peak at $1.0651; support for the pair is priced at $1.0551. The U.S. Dollar Index, which is a relative measure of the Dollar’s strength versus a weighted basket of rivals, is trading at 99.498 .DXY, a loss of0.1% and off the recently struck 12-year high.
No Consensus on Patience
While most analysts do believe that the Fed’s rhetoric is likely to shift with the elimination of “patience” in its policy, a small minority believe that, given the Dollar’s appreciation in the absence of a rate hike which is now negatively impacting some US-based multi-national corporations, there is the slight chance that the Fed may yet again postpone a rate hike and thus won’t make a policy change at this point in time.