Market’s reaction to FOMC rate decision overnight was rather muted. The balanced to slightly positive statement secured the chance for June hike, which fed fund futures are already pricing in 100% odd. But it did little on changing the market expectations on the chances of the fourth hike this year in December. That is, it’s still uncertain.
Nonetheless, be patient. Expectations could build up again after today’s ISM services and tomorrow’s non-farm payroll. And, the rate path for the year should be much clearer after new Fed projections to be delivered after next FOMC meeting on June 13.
Here are some reports on FOMC that are worth a read:
- FOMC More Hawkish on Inflation, June Rate Hike a Done Deal
- Fed Keeping Things Gradual with Steady Decision and Balanced Statement
- Amid Rising Inflation, The Fed Remains on Course
- Fed Stands Pat But Appears Ready to Hike More Given its Newfound Comfort with Inflation
And the full statement here: (FED) FOMC Statement May 2, 2018
USD is staying in corrective mode after FOMC announcement. There is broad based selloff in the current 4H bar as seen in the USD Heat Map. But USD is held above yesterday’s low against all at this point. So the retreat is shallow so far. And the greenback remains the strongest one for the week. It just cannot overwhelm CAD still.