Disliked{quote} A very enlightened response. It is however slightly more important to guess how the FED will react to the data points for CPI and PPI if you want to predict what they will do. You then have to anticipate how the market will respond to the FED's reaction. None of which has anything to do with short term Forex price reactions.Ignored
And it worth noting that market usually price in future rate hike or cut, on Red economic data. (Buy the rumor on the data release, sell the fact on FOMC)
I dont think Powell will give the market what they want ~100bps rate cut. This will lead to a repricing in yield curve, money/swap market will reduce some rate cut from 4 FOMC cut (was 5 FOMC cut in 2024) to at least 3 FOMC cut ( 25bps cut per meeting (which more likely to be in line with DOT Plot), imo.
This will give a temporary boost in Dollar, as the excess 25bps (from 100bps to 75bps, need to reposition themselves or liquidate their shorts position on Dollar)
However, even tho the money market will reprice their rate cut, that does not mean there will be no rate cut in 2024. From the situation where we currently are, (at least 3 or a minimum of 1 cut 2024 is very likely).
This is what i am expecting as an overall scenario. Dollar to "temporarily" up.
However, exactly how the interest rate traders work (saw @EventsTrader and @Jolita usually trade and discuss the interest rate futures CME contract), i lack knowledge on it. There is still many instruments especially the derivatives ones that move the dollar.
Not afraid to be wrong, ik what am goin' to lose!
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