This is still one of my favourite pictures when it comes to teeing up Fed week. Credits to Hedgeye on that one.

Anyway, we're going into the phase where the countdown to the Fed will be stealing the focus in markets. The debate between whether the Fed will raise interest rates by 75 bps or 100 bps was a major factor in the past few weeks. But amid the blackout period, we're seeing punters settle on the former after some Fed policymakers also poured cold water on the idea of the latter two weeks ago.

Fed fund futures is showing odds of a 75 bps rate hike priced at ~79%. That sets out the expectations going into Wednesday's meeting decision.

The big question now will be how the Fed views the economy and if they can continue to see themselves moving towards a terminal rate of around 3.50% to 4.00%. In case you need a reminder, the Fed funds rate is now at 1.50% - 1.75% so another 75 bps rate hike will bring that to 2.25% - 2.50% with three more FOMC meetings to go through before year end.

If the Fed sticks with a strong resolve to battle against inflation, I would argue that will keep the dollar underpinned; all else being equal.

Europe has a multitude of problems. The UK is facing a cost-of-living crisis. Japan is still nowhere to be seen in the rate hike game. And commodity currencies are not likely to breathe too comfortably so long as there isn't any indication of a Fed pivot just yet (risk trades may not see a material turnaround).