Good morning,

Dollar dolllar bills

Eyes ahead to tomorrow’s FOMC where the Fed will raise rates in the US for the 3rd time this year. We expect to see a 25 BPS increase to 1.50 %. This is unlikely to move the price of the USD as the hike is priced in by Fed futures markets at 100%.

So what will move the Dollar? For one, Fed Chair Janet Yellen and her tone as she passes on the Chairmanship mantle, and two, any change to the ‘dot plots’ which currently indicate there will be three price hikes in 2018.

Also in the US we have the widely covered Alabama special election to replace Attorney General Jeff Sessions between Republican Roy Moore and Democrat Doug Jones. The Dems haven’t won in Alabama since 1992, and it doesn’t look like any change will be forthcoming today.

Punchy price rise

The rate of price increases in the UK has peaked at its highest level since 2012, rising year at a rate of 3.1%. Governor Carney of the Bank of England may be removing the dust from his quill. (In an archaic yet superbly well-kept tradition, the Governor of the BoE must write a letter to Chancellor of the Exchequer if the rate of inflation ever moves outside of a range between 1 and 3.1 % – i.e. close call for Carney).

Further into this week, on Thursday the ECB and BoE make interest rate decisions. Market watchers are not really expecting a move by either central bank – although investors will be watching the comments closely to try and predict the extent and frequency of any changes into 2018.

Have a great day,

Christopher Morriss, The WorldFirst Team