Fed: Hawkish hike to offer further support to the dollar – ING

The dollar has retained good momentum so far this week. In the opinion of economists at ING, the Federal Reserve can keep offering support.

Hawkish 75 bps Fed hike can keep dollar bid

“We expect a 75 bps rate hike by the Fed, accompanied by a hawkish tone and Dot Plot projections which may show a terminal rate around 4.25-4.50%. We think this could keep risk sentiment fragile and offer further support to the dollar.”

“With the relationship between short-term rate dynamics and most G10 pairs having waned lately, expect a big chunk of the market reaction to be driven by the reaction in global equities – here a still hawkish Fed may not be read as good news, and that is another reason why we expect the safe-haven dollar to remain bid.”

See – Fed Preview: Forecasts from 16 major banks, fast pace hiking cycle continues