Forex VPS
Forex VPS
ForexFunction Logo

"Forex trading involves a high level of risk"

Forex VPS
 Market Comments |  Technical Indicator Signals |  Cross Pair Rates |  Live Spread |  Live Charts |  Daily Pivot Points
Should I Be Concerned About a Fed Rate Hike? - Forex Function

Should I Be Concerned About a Fed Rate Hike?

Last Update: 17 February,2016
Print PDF

There is a widespread expectation among traders that the Fed will finally raise interest rates in 2015 after close to seven years at zero percent. This was fueled by a statement made by Vice Chairman William Dudley, who said that he hopes rates would increase this year. Since Dudley was previously considered as one of the members of the FOMC who were least likely to vote for a rate hike, analysts considered what he said as significant. However, this does not mean that an increase in rates is imminent but rather that this policy change is on the table for the Fed.

So far, however, traders don’t seem to believe that a rate hike would take place until December at the earliest. In advance of a Fed Reserve meeting set on September 16-17, the value of the dollar remained at a three-week low, retreating from March’s twelve-year highs. Analysts believe that the slowing down of the Chinese economy would lead the Fed to reconsider any interest rate hikes. Disappointing economic numbers from China fueled concerns that its growth would slow down to less than seven percent in the third quarter. This would be the first time it would have fallen to below this level since the worst of the global financial crisis.

So what could happen to the dollar if there is a rate hike? There are some analysts who believe that there is actually a weak link between the weakening of the dollar and Fed rate hikes. The dollar actually reacts by continuing to follow the predominant price trend. Thus, if the dollar was already in a down cycle, then it would continue to go down no matter what the Fed does.

Traders who subscribe to this analysis think that even if the Fed hikes rates earlier than expected, any reaction from the dollar would be muted. However, since the dollar has already been going up in value since mid-2014, there is a possibility that it would rally if the Fed undertakes a rate hiking cycle. Thus, traders should simply look at the price trend of the dollar and base their analysis on this rather than expecting any strong reactions that would cause the greenback to go up or down.

Submit Your Comments:

 Forex Trading VPS


Windows 2008/2012 | Server Location Amsterdam, France, Canada | Low Latency From Brokers| Super Fast Trading Experience | All types of EA supported | 3 Days Money Back Guarantee

Plan NameBuy Link CPU RAM Disk BandWidth Price (Montly)Price (Quarterly)Price (Semi-Annually )Price (Annually) InstallationBackUpSetup Fee
Economy buy now2 Core 756MB 15GB 1TB $6.50/M$6.20/M$5.90/M $5.50/M MT4 Pre-InstalledYesFree
Standard buy now 2 Core 1GB 25GB 1.5TB $8.50/M$8.20/M$7.90/M $7.50/M MT4 Pre-InstalledYesFree
Premiumbuy now 2 Core 2GB 40GB 2TB $16/M$15.50/M$15/M$14.50/M MT4 Pre-InstalledYesFree
Advanced buy now4 Core 3GB 60GB 2.5TB $26/M$25/M$24/M $22/M MT4 Pre-InstalledYesFree
Professionalbuy now 4 Core 4GB 80GB 3TB $33/M $32/M$31/M$29/MMT4 Pre-InstalledYesFree
Business buy now 4 Core 6GB 100GB 4TB$46/M $45/M$44/M$42/MMT4 Pre-InstalledYesFree
Platinum buy now 4 Core 8GB 120GB 6TB $59/M $58/M$57/M$55/M MT4 Pre-InstalledYesFree
Diamond buy now 4 Core 12GB 180GB 8TB $89/M $87/M$85/M$81/MMT4 Pre-InstalledYesFree

***We accept Neteller, Skrill, MasterCard, Paypal, Payza, Perfect Money, Webmoney !