TD Securities expects the dollar to weaken after the Federal Reserve keeps interest rates unchanged
2026-07-29 08:09
Odaily Planet Daily News Federal Reserve Chairman Kevin Warsh will announce the Federal Open Market Committee (FOMC) interest rate decision on July 29. The market widely expects the benchmark interest rate to remain unchanged at 3.50% to 3.75% for the fifth consecutive time. CME FedWatch data shows the probability of keeping rates unchanged is 95% to 98%.
TD Securities stated that traders are still overestimating the probability of a surprise rate hike, and the related pricing includes a risk premium from the Iran situation. The institution believes that if the Fed keeps rates unchanged as expected, the deviation between current market pricing and actual policy actions will narrow.
TD Securities expects that if the Fed refrains from raising rates for an extended period, the dollar will decline by approximately 2% in the second half of 2026. The institution believes that the Fed needs to see clearer evidence of sustained inflation and a strong labor market before considering a rate hike.
TD Securities stated that traders are still overestimating the probability of a surprise rate hike, and the related pricing includes a risk premium from the Iran situation. The institution believes that if the Fed keeps rates unchanged as expected, the deviation between current market pricing and actual policy actions will narrow.
TD Securities expects that if the Fed refrains from raising rates for an extended period, the dollar will decline by approximately 2% in the second half of 2026. The institution believes that the Fed needs to see clearer evidence of sustained inflation and a strong labor market before considering a rate hike.
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