USD to soften if markets believe the Fed tightening cycle is nearly complete – Scotiabank

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Economists at Scotiabank discuss FOMC’s policy decision. In their view, the US Dollar could weaken if the market believes that the Fed is near to end its tightening cycle.

Any hike is very likely to be accompanied by neutral or dovish language

“Our call remains +25 bps but any hike is very likely to be accompanied by neutral or dovish language that leaves the outlook for rates contingent on how the economy and banking sector evolve from here.”

“If markets believe the situation means the Fed tightening cycle is nearly complete, the USD is likely to soften.”