The First FED Rate Hike Expectation Has Been Brought Forward
Burc Oran
October 13, 2021
The First FED Rate Hike Expectation Has Been Brought Forward
Fed Funds Rate Futures, Estimated Priced in Moves
Fed Funds Rate Futures, Estimated Priced in Moves

The market is already over the tapering and start to price in 2022 rate increases. As the Fed dot plot suggests, the first-rate increase is expected to be at the end of 2022. But a December rate hike was already priced in before the last FOMC meeting. Since the start of October market expectation for the first-rate hike has been brought forward. November rate hike probability increased from %63 to %95 and September rate hike probability increased from %52 to %79. The strong increase was not only for the US but for the EU and the UK as well. But continuous speeches done by ECB members and president Lagarde about ECB should not rush to needless tightening because the inflation will most likely be temporary, reduce to September 2022 hike probability to %58. 

Dollar Index 4H Chart
Dollar Index 4H Chart

Because of the different tone of central banks between ECB and FED, the dollar index continues its uptrend that started in September. 94.2 can be followed as major support for the short-term. As long as the trend resumes and the ECB staying dovish, the dollar index’s bullishness may continue as well. 

Stay informed with market news by subscribing to our reading list.

FTD Articles is a website prepared by FTD Limited's research team. FTD Limited is an online brokerage company offering products of Forex, Spot Metals and CFDs.
The ideas and the information shown here have no responsibility of any of the trading decisions made by the investors or the visitors of this site. Therefore, under no circumstances will FTD Limited nor FTD Articles be held responsible or liable in any way for any claims, damages, losses, costs or liabilities resulting or arising directly or indirectly from the use of website content. We recommend that you seek advice if you have not involved with trading before in order to prevent potential risks that may arise.