Bank of America Global Research discusses the USD outlook around tomorrow's FOMC policy decision.
"With broad general expectations of a 50bp move from the Fed, the impact for the USD from the rate move itself will likely be muted. In particular, the rate hikes from the Federal Reserve that had been fueling USD upside over the past year are being matched at other central banks, such as the expectations that the European Central Bank and the Bank of England will also hike by 50bp this week as well. However, messaging about the future could well be the key story for FX markets, particularly around their refreshed projections as well as of course the press conference," BofA notes.
"Ultimately, we look for mixed USD performance through next year, with near-term strengthening back towards parity for EUR-USD, but with a longer-term end-2023 forecast of 1.10," BofA adds.
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