The U.S. dollar has pulled back on Wednesday from a 14 yr. high ahead of the release of minutes from the U.S. Federal Reserve that are reported later today from the Fed’s December policy meeting in Washington D.C. where U.S. central bankers decided to raise interest rates for the second time in nearly a decade.
During the Fed’s December monetary policy meeting, central bankers voted overwhelmingly in favor of hiking rates.
Median projections from central bankers in the Fed show 3 more interest rate hikes are expected in 2017, based on the expectation that the Fed will continue down the path of raising rates at the pace of 0.25 basis points.
A bullish sentiment was believed to have occurred during the Fed’s December policy meeting where central bankers in the Federal Reserve projected 3 more interest rate hikes in 2017, compared to only 2 rate hikes that were initially projected at their September policy meeting.
The median rate hike projection for 2017 at the Fed’s December monetary policy meeting shows the federal funds will rise to 1.4 percent compared to just 1.1 percent that was initially projected at the Fed’s September monetary policy meeting.
Although President elect Donald Trump is talking about U.S. GDP rising to the 4-5 percent range under his leadership, U.S. central bankers in the Fed have a median projection of 2.1 percent in 2017 based on their latest projections from the December policy meeting.
U.S. equities have been bullish since Donald Trump won the November 8th U.S. election based on the hope that a Trump presidency will usher in a new era of lower interest rates, lower regulations, and more fiscal stimulus in the form of 1 trillion infrastructure spending.
Due to those pro-growth expectations, some economists are now expecting inflation to rise higher under a Trump presidency; however, many of those fiscal policy changes Trump proposed will still require some measure of bi-partisan support on Capitol Hill.
Democrats are outnumbered in the House of Representative and in the Senate but they could still decide to resist and not go along with some of the fiscal policy changes that Trump has proposed.
Budget hawks in the Republican Party who are wary of adding more infrastructure spending and increasing the U.S. federal deficit could also refuse to go along with some of Trump’s plans.
Yesterday U.S. equities rose across the board to kick off 2017 on a positive note after U.S. economic data was positive with November construction spending and the December ISM index rising higher than expected.
Besides the December Fed minutes that are due out later today, Auto/Truck sales for December will come into focus.
Tomorrow ADP will release the jobs report for December concerning private sector jobs and ISM Services for December will also be released.
The big market moving data will come on Friday when investors will pay close attention to the December non-farm payroll jobs report from the U.S. Bureau of Labor Statistics.
Economists from briefing.com have a consensus estimate of 175,000 non-farm payroll jobs added in December after 178,000 were gained in November.