The Fed and The Bank of Japan are
holding their respective policy meetings today. I see a Fed rate hike as being highly
improbable, given that recent data – while on balance okay – doesn’t seem to be
threatening enough relative to the signals the voting members have been sending. Plus, the dollar’s been rallying lately (first chart) and the Fed is clearly concerned
about bringing back the strong currency scenario that some would say has
tempered the recovery over the past couple of years: click charts to enlarge
holding their respective policy meetings today. I see a Fed rate hike as being highly
improbable, given that recent data – while on balance okay – doesn’t seem to be
threatening enough relative to the signals the voting members have been sending. Plus, the dollar’s been rallying lately (first chart) and the Fed is clearly concerned
about bringing back the strong currency scenario that some would say has
tempered the recovery over the past couple of years: click charts to enlarge
Therefore, assuming they don’t hike,
it’ll be all about the post-meeting commentary. Given the recent hawkish tone among an
increasing number of voting members, I suspect that the announcement and Janet Yellen’s press conference may yield a sterner warning to
the market that a hike is on the near-term horizon. If so, we may see the
dollar rally anyway. It was actually up during equity market trading today: