Talking Points:
- Fed funds futures pricing in 25-bps rate hikes in June (93% implied probability), September (77%), and December (51%). - Rise in US Treasury yields and bump in rate hike expectations coincides with US Dollar (via DXY[1] Index) breaking downtrend from March, April, November, and December 2017 highs. - See the full DailyFX Webinar Calendar[2] for upcoming strategy sessions. Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides[3]. The US Dollar has continued its tear this week, on pace for its seventh daily gain over the past eight days. The catalysts have been twofold: a steady push higher in rate hike expectations by the Federal Reserve in 2018; and a rise in US Treasury yields across the curve. To the first point, Fed funds futures are now pricing in 25-bps rate hikes in June (93% implied probability), September (77%), and December (51%). While a December rate hike is the least certain of the three, ongoing acceleration in inflation figures to keep the Fed on a path of gradually raising rates at meeting that coincide with the release of new Summary of Economic Projections. Table 1: Fed Rate Hike Expectations (April 26, 2018)