Weekly FX Technical Insights

The greenback fell across the board in the relatively quiet week that passed. But this week’s highly-anticipated Federal Reserve monetary policy announcement is at the forefront and promises big moves within the FX space. The FOMC decision is due at 18 June 2015, 2.00am Singapore time. This meeting is also accompanied by Fed Chair Janet Yellen’s post-FOMC press conference and a review of the latest FOMC economic projections. Our long-held view that the Fed rate normalization will take place in the June 2015 FOMC is now at the guillotine but markets are pricing in a later execution date although still expected to be sometime this year. (If the Fed does hike in June, it is really because they want to be off the zero interest rate bound, in our view). Based on trading in futures and options data compiled by Bloomberg, the probability of a Fed liftoff by June is zero while the odds of a July increase are at 4.5% (as of 15 June). A September increase was also higher at 30.9% while a December increase rose to 60.5%.