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Figure Heloc 
Rate cuts by year-endFed: 11 bps (94% probability of no change at the next meeting)Rate hikes by year-endRBNZ: 58 bps (96% probability of no change at the next meeting)ECB: 56 bps (92% probability of no change at today’s decision)RBA: 55 bps (55% probability of rate hike at the next meeting)BoJ: 45 bps (53% probability of rate hike at the next meeting)BoC: 42 bps (95% probability of no change at the next meeting)BoE: 35 bps (98% probability of no change at today’s decision)SNB: 25 bps (75% probability of no change at the next meeting)(You can find last week’s market pricing here.)The repricing in interest rates expectations continues to be driven mainly by the US-Iran war. The prospects for a quick end to the war continue to fade, especially amid the latest escalations.The TACO hope has been keeping the markets afloat but that hope is coming under strong pressure. The timeline for the end of the war continues to be extended and the Fed has put more emphasis on inflation risk.The longer this war drags on, the worse the impact will be on the global economy. Eventually, rate hike expectations could quickly turn into aggressive rate cuts amid recessionary worries.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The Fed’s stance on rate cuts signals a cautious approach, and here’s why that matters for traders: With an overwhelming 94% probability of no change at the next meeting, traders should brace for a potentially stagnant environment in the USD. This could lead to increased volatility in forex pairs, particularly those involving the Euro and the Australian Dollar, as the ECB and RBA are also signaling their own rate decisions. The RBNZ and ECB’s expected hikes of 58 bps and 56 bps respectively could strengthen their currencies against the USD, creating opportunities for strategic trades. Look for key technical levels in EUR/USD and AUD/USD as these central bank decisions unfold. If the RBA surprises with a hike, it could shift sentiment rapidly, so keep an eye on the 0.65 level in AUD/USD as a potential breakout point. But here’s the flip side: if the Fed does decide to cut rates by year-end, it could lead to a weakening dollar, impacting commodities and crypto markets. Traders should monitor the correlation between USD movements and Bitcoin, as a weaker dollar often boosts crypto prices. Watch for any shifts in sentiment around the Fed’s next meeting, as that could set the tone for the rest of the year.
📮 Takeaway
Watch the 0.65 level in AUD/USD closely; a surprise RBA hike could trigger significant movement in the forex market.
