Dollar Supported by Hawkish FOMC
The U.S. dollar index is higher and is likely to remain firm in advance of Wednesday’s FOMC policy statement at which U.S. policymakers are expected to hike the fed funds rate by at least 75 basis points for the third time.
Interest rate differential expectations remain bullish for the greenback.
The euro currency is lower despite news that construction output in the euro area increased 1.5% year-on-year in July of 2022, following an upwardly revised 1.3% increase in the previous month.
The British pound continued to decline to below $1.13, which is the lowest level since 1985.
The Bank of England may hike its main rate by 75 basis points at its policy meeting on September 22.
The Japanese yen remains near a 24-year low.
Bank of Japan Governor Haruhiko Kuroda will likely keep the central bank’s main policy unchanged at its meeting on Thursday.
STOCK INDEX FUTURES
Futures are lower in advance of this week’s Federal Open Market Committee meeting.
Prospects of an aggressive tightening policy continues to dent sentiment.
The 9:00 central time September housing market index is expected to be 48.
The dominant fundamental is the hawkish Federal Reserve.
INTEREST RATE MARKET FUTURES
According to financial futures markets, there is an 80.0% probability that the Federal Open Market Committee will hike its fed funds rate by 75 basis points and a 20.0% probability that the rate will increase by 100 basis points at the September 21 policy meeting.
The inverted Treasury yield curve is becoming more inverted and continues to warn of economic risks ahead.
The bearish influence of a hawkish Federal Reserve is overpowering the bullish influence of a weakening economy.
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