🌍 Markets Brace for FOMC: Focus on Cut Size and Forward Guidance
🏦 Key Points
Tonight’s FOMC decision (announcement due 3:00 JST, Sept 18) is widely expected to deliver a 25bp rate cut.
A minority still see risk of a 50bp cut, though this is viewed as politically driven and could raise concerns over Fed independence.
The dot plot revision will be the centerpiece: whether projections shift from two cuts to three cuts by year-end.
💱 FX Market Snapshot
Dollar selling remains in play; EUR/USD trades near a four-year high zone.
USD/JPY is capped in the 147s, lacking clear direction.
If the decision meets consensus (–25bp), risk is for a “sell the rumor, buy the fact” dollar rebound.
📊 Today’s Key Data & Events
🇿🇦 South Africa: CPI, Retail Sales
🇪🇺 Eurozone: Final HICP (Aug)
🇺🇸 U.S.: Housing Starts, MBA Mortgage Applications
🇨🇦 Canada: International Securities Transactions, BoC policy decision (25bp cut expected)
🇧🇷 Brazil: Central Bank policy rate decision
ECB speakers: Lagarde, Nagel (Bundesbank)
U.S.: FOMC decision + Quarterly Economic Projections (SEP)
🇬🇧 U.K. CPI (Aug)
Headline +3.8% YoY, in line with forecasts.
Core CPI +3.6% YoY (slowing), services prices also easing.
GBP steady vs EUR but softer vs USD.
📉 Dollar Index (DXY)
Dropped to 96.58 in Tokyo hours, rebounded to 96.84 in early London trade.
Still at depressed levels but showing signs of stabilizing.
💹 Key FX Ranges (near-term outlook)
Pair Support Resistance Comment
USD/JPY 146.50 148.50–149.00 Highly event-driven; above 149 invites intervention risk.
EUR/USD 1.1650 1.1800 Dollar softness persists; dovish FOMC could push beyond 1.18.
GBP/JPY 197.50 200.00–201.50 Fiscal concerns cap upside, but CPI keeps floor intact.
CAD/JPY 105.50 108.50 BoC decision in focus; break below 106 would deepen downside.
AUD/JPY 96.00 98.00 Driven by AU jobs and U.S./Japan policy outcomes; volatility likely.
NZD/JPY 85.00 87.00 Rate-cut expectations weigh; bias to sell rallies.
ZAR/JPY 8.25 8.50 High yields supportive, but political risks fuel swings.
✅ Strategy Summary
If FOMC delivers as expected (–25bp): Potential for short-term USD rebound on “buy the fact” positioning.
If surprise –50bp cut: Initial sharp USD sell-off, but bond-market reaction could create complex FX dynamics.
Medium term: U.S. labor softness and disinflation remain dollar-negative. EUR, JPY, and Gold likely to stay supported.
