HSBC: Dollar Unlikely to Rise Sharply Unless the Fed Hikes Rates

Paul Mackel, HSBC economist, said in a report that the Fed's decision this week is unlikely to provide a new catalyst for dollar gains unless the U.S. central bank unexpectedly raises rates. According to Jin10, he said Fed Chair Kevin Warsh has acknowledged that inflation is above target and expressed a commitment to price stability, adding that if this week's meeting only matches those views, the dollar is unlikely to rise sharply because the market has already priced in a rate hike later this year. He also said some people are considering the idea of an unexpected Fed rate hike, as it did in February 1994, and that if the market sees it as a prudent move and welcomes it, the dollar would be boosted.