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The FOMC comes before Friday's first look at the US Q2 GDP data. As always we will be looking for clues from tonight's FOMC as to what the data may show but could it cause the Fed to act beforehand?
Certainly a hike tonight would show that the economy is worthy of one, if the data dependency Fed is to be believed, and would surely tip the nod at Friday's figures.
The economy had been stronger before they hiked last year, and although it's not as strong as that now, the Fed has a mandate of maximising employment, stabilising prices and maintaining moderate long-term interest rates. The rebound in the NFP report keeps the jobs mandate firmly on track and prices are nearer the Fed target than not. If you had to hold them to their mandate it's hard to understand why they haven't hiked again.
So expectations for tonight are low but there is still a risk of them hiking. If they don't hike today, they may well give a strong indication that Sep is on the cards, if they've seen that Friday's GDP is good.
One way or another, today and Friday is going to be very important for the dollar heading into the last months of the year.
So could the Fed hike tonight or will they remain sitting on their hands?
Over to you.
