🌍 Markets Brace for FOMC: Focus on Cut Size and Forward Guidance
🏦 Key Points
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Tonight’s FOMC decision (announcement due 3:00 JST, Sept 18) is widely expected to deliver a 25bp rate cut.
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A minority still see risk of a 50bp cut, though this is viewed as politically driven and could raise concerns over Fed independence.
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The dot plot revision will be the centerpiece: whether projections shift from two cuts to three cuts by year-end.
💱 FX Market Snapshot
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Dollar selling remains in play; EUR/USD trades near a four-year high zone.
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USD/JPY is capped in the 147s, lacking clear direction.
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If the decision meets consensus (–25bp), risk is for a “sell the rumor, buy the fact” dollar rebound.
📊 Today’s Key Data & Events
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🇿🇦 South Africa: CPI, Retail Sales
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🇪🇺 Eurozone: Final HICP (Aug)
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🇺🇸 U.S.: Housing Starts, MBA Mortgage Applications
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🇨🇦 Canada: International Securities Transactions, BoC policy decision (25bp cut expected)
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🇧🇷 Brazil: Central Bank policy rate decision
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ECB speakers: Lagarde, Nagel (Bundesbank)
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U.S.: FOMC decision + Quarterly Economic Projections (SEP)
🇬🇧 U.K. CPI (Aug)
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Headline +3.8% YoY, in line with forecasts.
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Core CPI +3.6% YoY (slowing), services prices also easing.
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GBP steady vs EUR but softer vs USD.
📉 Dollar Index (DXY)
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Dropped to 96.58 in Tokyo hours, rebounded to 96.84 in early London trade.
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Still at depressed levels but showing signs of stabilizing.
💹 Key FX Ranges (near-term outlook)
| Pair | Support | Resistance | Comment |
|---|---|---|---|
| USD/JPY | 146.50 | 148.50–149.00 | Highly event-driven; above 149 invites intervention risk. |
| EUR/USD | 1.1650 | 1.1800 | Dollar softness persists; dovish FOMC could push beyond 1.18. |
| GBP/JPY | 197.50 | 200.00–201.50 | Fiscal concerns cap upside, but CPI keeps floor intact. |
| CAD/JPY | 105.50 | 108.50 | BoC decision in focus; break below 106 would deepen downside. |
| AUD/JPY | 96.00 | 98.00 | Driven by AU jobs and U.S./Japan policy outcomes; volatility likely. |
| NZD/JPY | 85.00 | 87.00 | Rate-cut expectations weigh; bias to sell rallies. |
| ZAR/JPY | 8.25 | 8.50 | High yields supportive, but political risks fuel swings. |
✅ Strategy Summary
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If FOMC delivers as expected (–25bp): Potential for short-term USD rebound on “buy the fact” positioning.
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If surprise –50bp cut: Initial sharp USD sell-off, but bond-market reaction could create complex FX dynamics.
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Medium term: U.S. labor softness and disinflation remain dollar-negative. EUR, JPY, and Gold likely to stay supported.
