The dollar is preparing to take a hit from fed
The yield on 10-year treasuries on Tuesday slipped to the lows of late August. The index declined 3.5 basis points to a mark of 2,821%. This factor amplifies the effect of deleveraging of risk and puts additional pressure on the dollar versus the yen. Since then, the pair aggressive fall for third day in a row closer to around 112.00.
Everything points to prepare investors to the fed meeting, which starts today and will end on Wednesday evening. Judging from the pressure that felt the U.S. currency and the yield on Treasury bonds, the fed, the players lay in the price openly dovish Powell, while a rate hike is taken for granted. Although some doubts have markets there on this.
However, investors may be too dramatic background for a dramatic change of rhetoric of the Central Bank, despite endless criticism of the regulator from the White house. On the eve of the trump again warned the fed from raising rates on Wednesday, as the adviser of the President Navarro. The US economy really is signaling a slowdown, but not as tragic as the market fears, at least at this stage.
Given the pessimistic expectations, the potential fall of the dollar following the meeting of the fed may be limited, but if the Central Bank would leave investors hope for a rate increase in 2019, though at a more modest pace, “American” can even strengthen. But overall the balance of risks in the context of an upcoming event shifted to the downside.
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