There is a fair amount of profit-taking ahead of the long-awaited FOMC meeting release tomorrow, which the market sees as having a 95% chance of producing a hike in the Federal Funds Rate of 0.25%. This leaves the markets overall flat.
If for any reason the FOMC passed on the hike, we should expect the U.S. Dollar to be hit hard. What it would do to the U.S. stock market would be a more open question.
Earlier today, British Inflation figures were released showing prices rising at an annualized rate of 1.2%, which is the CPI’s highest reading for two years. This boosted the Pound, as it increases speculation that the Bank of England’s next move might need to be a rate rise rather than a rate reduction, or some other kind of tightening of monetary policy. Otherwise, the increasing inflation might be bolstered to an uncomfortable level by imported inflation deriving from the historically very low level of the currency.
