Markets have finally shifted (at least a little bit of) their attention away from President Trump, with tomorrow's highly anticipated Federal Reserve monetary policy meeting taking center stage. We've beaten the heck out of the dead horse explaining that traders have already completely priced in a rate hike from the venerable central bank (see "What the buck is up with the dollar this year?" and "Two signs stock market investors are preparing for (much?) higher interest rates" for just the two most recent examples).

From a trading perspective, this means that the Federal Reserve's (assumed) decision to raise rates 25bps tomorrow will not, in and of itself, move markets. That said, there's still the potential for big movements in the FX and stock markets based on the other components of the Federal Reserve's big meeting. So what will we be watching at come 2:00pm ET (18:00 GMT) tomorrow?

1) Interest Rate Decision

Once the outcome of the monetary policy meeting is announced, just take a quick moment to verify that the Fed has fulfilled expectations and raised interest rates by 25bps. If the Fed fails to raise rates, the dollar would likely tank while US stocks could surge; we would likely see the exact opposite reaction if the Fed hikes by 50bps, but both of those are extremely unlikely

2) Interest Rate Forecasts ("Dot Chart") / Summary of Economic Projections

This is where the biggest potential for market-moving revelations lies. Based on past experience, we know that the Fed's projections won't necessarily come true, but the central bank's Summary of Economic Projections (SEP) provides the best insight into where the Fed stands right now.

If the Fed's infamous dot chart shows that the median Fed member is anticipating three more rate hikes this year (i.e. to the 1.50-1.75% range), we should see the dollar catch a bid and US stocks could lose ground. These moves could be reinforced by a corresponding upgrade in the central bank's GDP and inflation forecasts.

However, if the median 2017 Fed "dot" stays in the 1.25-1.50% bucket, it could pour cold water on the dollar rally and provide a boost to US stocks. Along the same lines, unchanged outlooks for 2017 GDP growth and price pressure would be negative signs for the US economy and by extension, the US dollar.

3) Wording of the Fed's Monetary Policy Statement

On its "in-between" meetings, every word and miniscule change to the Fed's monetary policy statement is dissected ad nauseam. This time around though, traders will have a have an updated SEP to dig through, as well as Janet Yellen's press conference at 2:30pm ET (18:30 GMT) to provide color on the decision. As such, the statement will be less critical than it often is. That said, any explicit reference to improving inflation or unemployment figures could reinforce the "hawkish hike" thesis that the dollar needs to extend its gains. A generally-unchanged statement beyond the rate hike would be a slight disappointment for buck bulls.

4) Janet Yellen's Press Conference

Ever since her initial "something on the order of around six months or that type of thing [before the first rate hike]" slipup back in 2014, Dr. Yellen's press conferences have been remarkably (intentionally?) humdrum. Once again though, we expect the audience to press her to offer explicit views on a number of economic topics, including the limits of global monetary policy, any concerns with asset prices/bubbles, and her level of optimism surrounding the US economy and inflation. Much like with the statement and SEP, it will take a relatively hawkish view from Yellen to boost the buck further and take the wind out of the longer-term uptrend in stocks.

As you can see, there will plenty for traders to watch from the Fed tomorrow, even if a 25bps rate hike is already as close to a "done deal" as we've seen in years.

This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.

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