Heading towards the Fed release on Wednesday a sense of caution prevails. Despite the market looking for a pivot, the Fed has maintained an aggressive stance.
Since 23 January, the US 10-year real rate has appreciated. The market will look carefully at the communication from tomorrow's release.
Risk assets are risk-off with the higher yields. Money has moved back into the dollar. FXCM's USDOLLAR basket has benefitted, having a correlation coefficient of 62%, against the real rate.
A hawkish Fed will see capital rotate into the dollar, as safety is sought. However, if the Fed shows hints of relenting, the dollar is a likely target for shorts.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.