The risks for the dollar are probably pretty even going into this Fed meeting.
The risk if you are a dollar hawk is they show they are closer to neutrality and if you are a dollar dove that they show no evidence of being done.
Come the Fed meetings around April, May, June next year, this may have an impact.
Interest-rate differentials are what are helping the dollar right now. The difference between U.S. and other investment horizons has widened of late.
It was all one way. It was just a matter of momentum picking up after 8 a.m..
That really backed up the fact that strength is still expected in the economy, which means more rate hikes to keep inflation at bay, so that has supported the dollar this afternoon.
There are continued expectations of more Fed rate increases, whereas with other central banks we may only see a one- off move here and there. The reasons to be in the dollar outweigh any other currency.
We are getting a consistent view from the Fed now that they are somewhat worried about the risk of a higher inflation rate. That is going to cause more rate hikes to come and higher yields will help the dollar.
Consumers have been the strongest piece of this economy, so if we see some weakness in retail sales, and the Michigan survey should be off on Friday, we should see the euro win the benefit of the doubt,
Overall, the ISM number is definitely a strong figure, as well as the construction spending report, which is much higher than expected.
