US FX WRAP: Dollar gains post hawkish FOMC

The Dollar saw strength, and surged to session highs in wake of the latest FOMC confab, resulting in a broad hawkish reaction across markets. Overall, the Fed hiked rates 25bps as expected in a unanimous decision. In the updated SEPs, the median sees another 25bps hike in 2026, and is at 4.125% through end-2027, implying one further hike this year followed by rates remaining on hold throughout 2027, before easing to 3.875% in 2028 and 3.625% in 2029. In the Chair Warsh presser, the overall message was a familiar one, with price stability remaining the primary focus. While the FOMC dominated the calendar on Wednesday and was the primary catalyst, there was some tier 1 data, albeit had no impact on the Greenback; retail sales surged, and notably above expected, although desks cited seasonality reasons, while import/export prices also lifted above Wall St. consensus.

As mentioned, G10 FX was lower across the board vs. the Dollar, and seeing similar losses, on account of the aforementioned, as opposed to much currency-specific newsflow. The Pound had regional inflation metrics to digest; the headline rose from the prior (in-line), Core Y/Y and Services were unchanged from the previous month, and as such the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. Following the data, Cable saw some two-way action before eventually moving lower as traders curtailed their rate hike bets.