The results of the first US FOMC meeting of the year are scheduled to be announced today. Since the end of last year, the market has fully priced in a 25 basis point hike, so there seems to be no turbulence about the size of the hike. The focus will likely be on the content of Chairman Powell’s press conference. There is a tendency among market participants to lower their outlook for the terminal rate. The background is the repeated slowdown in inflation indicators. Yesterday, there was a strong interest in wage-related indicators, as evidenced by dollar-selling reactions to the slowdown in growth in the employment cost index (fourth quarter).
However, the inflation level has not yet fallen to the target level. Chairman Powell is expected to continue to emphasize the need to curb inflationary pressures by raising interest rates. The market is ahead of the curve, even speculating that interest rates will be cut before the end of the year.
Waiting for the FOMC, it will be difficult to move today. The big line of sight is to continue selling USD.
