FOMC Not a Big changer for USD - BofAML

Bank of America Merrill Lynch FX Strategy Research expects the FOMC to raise rates at this meeting but thinks the messaging will have dovish undertones.

" We expect no change in the median dot. We think some officials will lower theirs, offsetting the removal of Tarullo's dot." BofAML adds.

FX: Not a game-changer for the USD:

" As the market has already priced a June hike, we do not expect the decision to affect the USD. The market focus will be on the tone and any signals for the pace of hikes in the rest of the year and next year. Following mixed recent data, we believe markets already expect a dovish hike. A negative surprise for the USD will be any changes to the dot plot towards a slower pace, but it may be too early for that.

We have recently suggested that USD bulls be patient, as it could take time for another USD rally. The USD is the worst performing G10 currency this year, but short -term risks remain negative in our view. We think it could take few more months for the market to move toward the Fe's dot plot and our view. It could also take few more months to know whether the US will reform its tax system,"

Source of the graph: Bloomberg Pro Terminal

Trader - Senan Fuchedzhiev

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