How will Federal Reserve Decision Affect USD CHF AUD Forecast?

September 17, 2015 - Written by Frank Davies

STORY LINK How will Federal Reserve Decision Affect USD CHF AUD Forecast?

FOMC Announcement Forecast to Impact US Dollar Exchange Rate News and Outlook Today

FX insiders are split on the likely outcome of this evening’s US Federal Reserve FOMC monetary policy decision. Surveys carried out this week suggest that around 50% of respondents believed that the Fed will announce at 1900hrs BST this evening that it will be increasing its headline interest rate for the first time in almost a decade.

However, the other 50% feel that the Fed’s policy steering team will decide that, given the increasing evidence of a real slowdown in the Chinese economy, it’s just too early for an American interest rate hike. In the end, the effect which tonight’s announcement has on the currency markets may come down to the wording of the Fed statement which accompanies its decision. Our leading analysts looks at the likely fall-out for three of the world’s leading currencies following the announcement…

The US DOLLAR (currency : USD) is the most obvious candidate for price action during the hours following the Fed announcement. An increase in rates is forecast to favour the Buck, with analysts predicting that this will send the Pound Sterling US Dollar exchange rate back down into the 1.4000’s; in such a situation, the ultimate target for GBP USD would come at the pair’s key level of support of 1.3600.

The outlook for the Greenback is NEUTRAL TO POSITIVE and the GBP USD exchange rate sits at 1.5502.

CHF Exchange Rate Forecast: Swiss Franc has Neutral-Positive Bias with Pound

The SWISS FRANC (currency : CHF) has endured a difficult few weeks and the Pound Sterling Swiss Franc exchange rate has settled above the 1.5000 threshold during the past 24hrs. However, last month’s Black Monday, which saw a pronounced flight to safety from investors sending global equities markets into a tailspin, proved that the Swissie retains its allure as a safe haven tender. Support for the Franc spiralled on the day and FX insiders suggest that a tightening of policy by the Fed may well trigger a similar situation this evening. The Swissie is forecast to trade with a NEUTRAL TO POSITIVE bias moving forward and the GBP CHF exchange rate stands at 1.5040.

GBP-AUD Could Hit Best Rate on FOMC Rate Hike Today

The AUSTRALIAN DOLLAR (currency : AUD) remains a high-yielding currency, in relative terms at least, in spite of the fact that Australian interest rates have dropped to 2.00% during recent months. However, with a small population and a wealth of raw materials to export to the rest of the world, the Aussie remains susceptible to a bout of selling pressure if the Fed raises interest rates tonight. Even if they don’t, the Aussie is still likely to lose out if US policymakers hint at an imminent tightening of policy.

The outlook for the Aussie is NEUTRAL TO NEGATIVE and the GBP AUD exchange rate sits at 2.1705.

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