Could Fed leave rates on hold in Nov? USD bulls hope so
Oct 7 (Reuters) - The dollar might go from strength to strength if the Federal Reserve springs a huge surprise and leaves interest rates unchanged on Nov. 7, two days after the U.S. presidential election.
Markets currently see a one-in-ten chance of the Fed keeping rates on hold next month, and zero chance of a 50 basis point rate cut, after a hawkish shift in expectations spurred by Friday's strong U.S. jobs data. FEDWATCH
Before the data - which propelled the USD index to a seven-week high of 102.69 - was published, markets saw zero chance of a Nov. 7 hold, and a 32% chance of another 50 bps cut. The consensus expectation is that the Fed will reduce rates by 25 bps, following September's half-point cut.
The probability of a Fed hold shock in November may rise if Donald Trump wins the presidential election, courtesy of the perception that U.S. inflation might run hotter if Trump is in the White House from January rather than Kamala Harris.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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