Virtually no Wall Street economists expect a Fed rate hike today, but the messaging will be intended to reinforce the ‘high for longer’ theme and leave a door open for a further hike if needed.

Solid US economic data and the FOMC’s desire to send a clear message both that rates could rise again and that they won’t come down soon, supports the Dollar. Given a deliberately vague policy message, the market is likely to go on pricing a 50% chance (or so) of a further hike, and pricing of the first rate cut could be pushed further into the future.

While US data remains resilient and European/Asian data remains soft, the tide is with the Dollar. All the more so given the slow and steady grind higher in Treasury yields. I still think that high US treasury supply is pushing yields up and sucking in spare capital from around the world, supporting the Dollar. That can continue until the data changes.