In what appears to be the calm before the storm, the markets seem calm ahead of the Fed meeting this evening, as interest rates are widely expected to rise by 25 basis points to 2.50% for the fourth time this year, but attention will be focused on the Fed's expectations for interest rate hikes in 2019 under expectations of slowing the pace of monetary tightening initiated by the Fed in early 2015.
The US dollar continued its decline for the third consecutive day against a basket of currencies to record daily low at 96.75 near the uptrend line on the daily chart. The decline in the dollar is due to investors' expectations that the Federal Reserve will slow the rate hike in 2019, as well as trade tensions between the US and China, which have put markets in doubt that the dollar will continue to strengthen in 2019.
On the other hand, Trump continues to pressure Federal Reserve policymakers by continuing to criticize the monetary tightening policy and claiming that interest rates hike should be stopped.
Canadian inflation data has just released, with the consumer price index slowing to 1.7% in November versus expectations for a 1.8% rise. The Bank of Canada wants inflation to stay at 2% in the midpoint range of 1-3%.
British inflation fell to a 21-month low in November, with the annual consumer price index up 2.3% after rising 2.4% in October, and the Bank of England is not expected to change when it meets tomorrow as political uncertainty continues over Britain's exit from the EU, the BoE has raised rates only twice since November 2017.
