Forex Top Team

Exploring views on the pace of future interest rate hikes and final levels in the minutes of the US FOMC

Today, the latest US FOMC meeting minutes (held on November 1-2) will be released. Preliminary market expectations are that the next rate hike in December will be reduced to 50 basis points. Currently, CME FedWatch is priced at 75.8% for 50bp and 24.2% for 75bp. A slowdown from four consecutive 75bp rate hikes is expected.

On the other hand, another key point is whether there is a change in the view of the terminal rate of interest rate hikes. In the latest market, there is a growing view that the terminal rate will rise above 5%, influenced by the outlook of a series of hawkish members such as President Bullard. It will be interesting to see what kind of discussions were held on this point at the beginning of November. The minutes will be announced at 4:00 am on the 24th, Japan time.

However, exchange rates are also affected by trends in the dollar’s counterparty currency. Yesterday’s OECD economic outlook said central banks around the world should continue to raise interest rates even in the face of a sharp slowdown. In particular, the euro zone, which has a high inflation rate, was of the opinion that the policy interest rate should be raised to the 4% level, which was considerably higher than the market forecast. It has been pointed out that the euro may become relatively easier to buy.

In addition, at today’s central bank monetary policy meeting, although it was expected, it announced a record 75bp hike in interest rates. A 100bp rate hike was also discussed, along with a 75bp hike, the people said. He also mentioned the need to continue raising interest rates in the future. While the market is looking at when the US FOMC will stop raising interest rates, it should be noted that there are still uncertainties in other countries.

We expect some movement at the US PMI Furthermore, since the FOMC meeting minutes show some movement, we are mainly thinking of short-term trading.