Markets await today’s interest rates hike from the Federal Reserve


The US dollar gained against major currencies on Tuesday as a result of ongoing challenging global events such as investors awaiting the Federal Reserve (Fed) policy decision, the war in Ukraine and China’s surging COVID-19 cases.

Today’s rate decision from the Fed represents a significant milestone for global markets as the interest rates hike will signal the start of a normalisation process. However, it is the Fed’s guidance on the outlook that will have the most impact on USD.

Interest rates are set to increase by 25 basis points. With inflation at record highs in the US, investors will be keen to know the outlook for the remainder of the year. With the rate hike priced in, analysts believe we could see some downside pressure for the dollar as they are unsure how much more hawkish the Fed can be.

Key announcements

12:30 – USD – Core retail sales m/m – Forecast at 0.9% from previous 3.3%
12:30 – USD – Retail sales m/m – Forecast at 0.4% from previous 3.8%
18:00 – USD – FOMC economic projections
18:00 – FOMC statement
18:00 – USD – Fed rate decision – Forecast at 0.5% from previous 0.25%