GBBEF - What A Shift In Fed Dots Would Mean For G10 FX
2024-03-20 10:12:00 ET
Summary
- In advance of tonight's FOMC meeting and new economic projections, we take a quick look at what any shift in the Fed's Dot Plots would mean for G10 FX.
- Correlations between expectations for the Fed easing this year and G10 FX are strongest for USD/JPY.
- Were the median Fed expectation for easing this year to shift to just two cuts, USD/JPY could push through 152.
By Chris Turner
Much focus on the Fed Dot plots tonight
Tonight sees the results of the March FOMC meeting, where we will see a new statement, a new Summary of Economic Projections (SEP) and Fed Chair Jay Powell hold a press conference. Perhaps of most interest to the market is the SEP release and, in particular, the median Dot Plot - or the median forecast of Fed members - for rate cuts this year. The last SEP release in December showed the Fed expecting to cut rates three times this year or by 75bp. ING's US economist, James Knightley, writes that on balance, the median Fed forecast for 2024 rate cuts probably stays at 75bp. But he notes that it would only take two Fed officials to shift their thinking for the median Dot to move to 50bp from 75bp of rate cuts for this year....
What A Shift In Fed Dots Would Mean For G10 FX