FOMC Interest Rate Decision to Provoke Market Volatility Today
The final US Federal Reserve monetary policy meeting of 2015 got underway yesterday afternoon and America’s central bank will make a policy announcement at 1900hrs this evening.
November’s official US Consumer Price Inflation data was published as the Fed meeting got underway late yesterday UK time and the fact that it revealed that core prices increased by a year-on-year 2.0% last month has caused investors to up their bets that tonight will mark the night when America’s interest rates increase for the first time in almost a decade.
The likelihood of such an outcome is pegged at over 80% by futures markets, but what would a US rate hike mean for the global currency markets? Our leading analysts considers this question below –
GBP to USD Exchange Rate Stands at around 1.5051
The US DOLLAR (currency : USD) has lost a little ground against Sterling during the past couple of weeks; however, the move against the Buck looked to be nothing more than positioning from speculators and the vast majority of analysts forecast that an increase in US yields tonight would see the Buck perform on a POSITIVE footing in the short to medium term. The current GBP USD exchange rate stands at 1.5051.
GBP to CAD Exchange Rate Trending in the Region of 2.0657
The CANADIAN DOLLAR (currency : CAD) has been hard hit by this week’s slump in global crude oil prices to a fresh 6 year low. However, a US rate increase tonight and the attendant dampening of American demand for Canada’s major export – Black Gold – would surely see the Loonie incur fresh losses and perform on a NEGATIVE bias. The GBP CAD exchange rate sits at 2.0657.
GBP to CHF Exchange Rate Trading around 1.4914
The SWISS FRANC (currency : CHF) was heavily downsold a month ago – a move which sent the Pound Franc exchange rate down to a near-term high at 1.55. However, the Swiss unit retains its allure as a safe-haven, so if tonight’s session does indeed bring news of a tightening of policy from the US, then expect the Franc to enjoy sustained support against the other major currencies. The outlook for the Swiss tender is therefore NEUTRAL TO POSITIVE and GBP CHF stands at 1.4914.