We’re a bit less than 24 hours from the next FOMC announcement. A 50 bp cut in the Fed funds target is expected, but that rate has become all but symbolic as Fed funds have traded well below target for months now as the markets remains flooded in reserves. As is often the case, it is the Fed’s statement that will be most eagerly awaited.
The key will be what the Fed has to say about its use of novel strategies like leveraging its balance sheet; so called quantitative ease. They’ve not said too much of late but they have a chance to set the record straight tomorrow.
Should they play down the use of quantitative ease, look for a rebound in the dollar. That is an unlikely outcome, however. Whatever the Fed says, it is unlikely to be supportive of the dollar in the short-term.
