Market not buying the Fed’s guidance suggests weaker USD – NBF
|The Federal Reserve refrained from softening its forward guidance. However, markets are not convinced that the central bank will fulfill its commitments. Therefore, the US Dollar is set to move downward, Stéfane Marion, Chief Economist and Strategist at the National Bank of Canada, reports.
Fed has yet to convince the markets that it will walk the talk of its latest guidance
“In its last dot plot of 2022, the FOMC was even more hawkish than just three months ago with the committee now seeing more rate hikes in 2023 with no rate cuts before 2024. But the Fed has yet to convince the markets, or us, that it will walk the talk of its latest guidance.”
“Following Chairman Powell's press conference, the two-year Treasury yield fell below the federal funds rate for the first time in this tightening cycle. Such an inversion at this stage of the economic cycle has historically been negative for the greenback – until a recession occurs (which is not our base case at this time).”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.