ING Expects One Final Fed Hike in December
ING forecasts a final Federal Reserve rate hike in December, citing oil price dynamics and diplomatic meetings as key drivers for the US dollar.
Key points
- ING expects the Fed to hike rates one final time in December this year.
- Crude oil prices remain above $100 per barrel, supporting the US dollar.
- Trump meetings with Gulf and Chinese leaders are key drivers for the currency.
ING expects the Federal Reserve to deliver one final rate hike in December. This decision comes despite a gradual negative outlook for the US dollar over the longer term.
The bank maintains a materially more dovish stance than current market pricing suggests. Analysts anticipate a sharp decline in oil prices during the fourth quarter.
Fed Hike Probability Drives Dollar Support
Markets currently price in a 13 basis point move for the next meeting. ING argues that a two-thirds probability of action compels the Fed to act.
Avoiding unwanted volatility at the back end of the curve is a primary concern. Stronger economic data could encourage further gains in energy prices.
Oil Prices Remain Key Market Driver
Crude oil prices have softened recently but remain above the critical $100 mark. Investors lack enough positive news to push prices back below that level.
The data calendar is sparse for the current week. Consequently, oil developments become the main determinant for US dollar direction.
Diplomatic Meetings Influence Currency Outlook
President Trump meets Gulf state representatives in New York this week. These interactions occur alongside the United Nations General Assembly proceedings.
A meeting with Chinese President Xi Jinping is scheduled for Thursday. Positive trade headlines from these talks could provide additional support to the dollar.
