USD Faces Volatility Risk Around Fed Decision, Analysts Warn

4:03 AM ETDeveloping

Business Desk

In Short: Market analysts warn of significant USD volatility around the Fed meeting, citing potential for a 60% probability of a rate hike and the importance of upcoming inflation data.

Market analysts warn of significant USD volatility around the Fed meeting, citing potential for a 60% probability of a rate hike and the importance of upcoming inflation data. According to Fxstreet, a substantial share of market participants would be caught off guard by the Fed’s decision, leading to pronounced volatility in USD exchange rates. The upcoming US inflation data for August is expected to be the key determinant of the Fed’s policy decision, with markets currently pricing in a probability of just under 60% for a rate hike in less than two weeks.

Fxstreet notes that if the inflation figures come in broadly in line with analysts’ expectations, markets are likely to maintain their current assessment until the Fed meeting, barring any materially different signals from FOMC officials. The content includes notes by commercial as well as additional insights by internal and external analysts, highlighting the divided positioning in the market and the potential for significant market reactions.

USD Faces Volatility Risk Around Fed Decision, Analysts Warn

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