USD: Firm tone with Fed on hold – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret observe that the US Dollar (USD) is firm but rangebound as higher Oil and mixed US-Iran headlines drive risk sentiment. The Federal Open Market Committee (FOMC) is expected to keep rates unchanged, with rising energy prices tempering dovish dissent and Chair Powell likely cautious as policy stays on hold until new leadership.

Dollar firm as markets eye FOMC

"The USD remains firm but is holding within the past week’s range against the major currencies."

"Today’s FOMC decision is not expected to result in any change in rates as policymakers wrestle with these developments but the surge in energy prices should dull recent dissent favouring a lower policy rate."

"Rising inflation risks may inject a note of caution in Chair Powell’s press conference but in effect, monetary policy is on hold at least until the Fed is under “new management”."

"The transition is perhaps going to be the subject of a lot of questions at what is likely to be Jay Powell’s last meeting as Fed Chair—specifically whether he will step down from the Board of Governors once he relinquishes the Chair. His term as Governor runs until 2028."

"Powell has said that he would remain at the Fed until the DoJ investigation is “well and truly over, with transparency and finality”. It remains to be seen whether he thinks that is now the case with the DoJ recently dropping of the case."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)