The USD is trading lower. All other major currencies are posting gains, while global stocks are mixed and bonds are generally softer as markets ponder this afternoon’s FOMC outcome, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Markets wait on Fed decision

“Beyond the rate decision itself, the FX reaction will be shaped by a range of factors—the policy statement, the Fed’s latest economic forecasts and dot plot and Chair Powell’s press conference.”

“There is likely to be some—limited—scope for short-term USD gains in the event of a 25bps ease while a 50bps cut will maintain broader pressure on it. Either way, the charts are reflecting a generally negative tone in the DXY across short-, medium– and long-term studies.”

“Loss of support in the index at 100.55 targets a 1-1.5% drop in the index in the short run (and sets up a 3% or so fall potentially). Note the DXY’s estimated fair value (based solely on weighted spreads) sits at 99.6 today.”