USD to outperform on insufficiently dovish Sept Fed decision – Morgan Stanley

Analysts at Morgan Stanley offer a sneak peek at what to expect from the September month Fed’s monetary policy decision due next week.

 Key Quotes:

“Expect the FOMC to cut the Fed funds rate by 25bp next week.

But the dot plot published alongside is unlikely to show more rate cuts for the balance of 2019 and into next.

Expect confusing dots reflecting the diversity of views on the committee.

FOMC materials are likely to be insufficiently dovish to meet the market's lofty expectations.

USD is likely to outperform on the day, particularly against risk-sensitive currencies like high-yielding EM FX and the dollar bloc.”