Hawkish Fed cries set to fall on deaf ears - ING

Typically, it is difficult for the dollar to rally on Fed meetings and this time may not be any different, according to Viraj Patel, Foreign Exchange Strategist at ING.

Key Quotes

“Hawkish Fed cries could fall on deaf ears again given the lack of convincing economic evidence. Fading the USD corrective rally may be a wise tactic ahead of the Fed meeting. We fear markets could still shift to the idea that any 'pause' in the Fed’s tightening cycle will be somewhat lengthy (if not permanent) and the risks are that the recent front-end flattening of the US yield curve has further to run.”

“In the absence of any convincing hawkish signal -such as a reference to another rate hike being 'appropriate soon' - we think the USD is likely to follow the historical pattern of moving lower in the aftermath of the FOMC meeting.”