Will Hawkish Fed Generate Dollar Tailwind? | Presented by CME Group

Summary

The video analyzes the June FOMC meeting under new Chairman Kevin Worsh, which surprised markets with a hawkish tilt. The dot plot showed a plurality of members favoring rate hikes, shifting the yield advantage back to the US. For currency traders, this is a tailwind for the US dollar, already at a one-year high, and raises the question of a sustained dollar rally.

• The June FOMC meeting under Chairman Worsh was highly anticipated and expected to be dovish but turned out hawkish.
• The dot plot revealed 9 of 19 members favor rate hikes by year-end, while only one expects a cut.
• Chairman Worsh expressed a desire to move away from future Fed projections, leaving his own dot absent.
• The US dollar is described as receiving a distinct tailwind from the hawkish shift.
• The dollar has gained 3.5% against major developed market currencies since May and is at a one-year high.
• The key question posed is whether this marks the beginning of a sustained dollar rally.