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Goldman Sachs monitors FOMC scorecard for short-term USD direction

As a reminder, the FOMC statement is at 19:00 GMT and President Powell speaks at 19:30 GMT.

Goldman Sachs:

  • The currency’s near-term direction will likely be determined by the Fed: If the dot plot at this week’s FOMC meeting shows a median of two increases for 2022, we could see the recent weakness expand as ‘a baseline of three or more hikes for 2022 would likely lead to a return to the dollar’s appreciation
  • Beyond this month, incoming inflation data will likely set the dollar’s price. There is a wide range of possible outcomes. In our benchmark outlook, which sees three Fed rate hikes next year alongside strong global growth, we see a limited range between the USD versus the EUR and most other G1Os, but Decent gains against the USD for a number of emerging market crosses.

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