The #1 reason the Fed hike was a touch on the hawkish side

Author: Adam Button | Category: Central Banks

The Fed maintained projections for roughly four hikes in 2016

The hike was no surprise but if the Fed really wanted to underscore a 'dovish hike', officials could have scaled back forecasts for hikes next year in the dot plot.

The central tendency remains 1.4% (or 1.375%, more accurately). It would have been easy for officials to skew this lower and send a signal about patience. Instead, they are signalling (albeit softly) a rate hike each quarter.

The dollar is higher after the decision. However, I highly caution against trading on fundamental skews, especially ahead of Yellen.

I believe fast money was piling into US dollar longs yesterday and will be taking profits today. Flows and positioning are far more important than fundamentals here.

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