A hawkish surprise from the Federal Reserve, together with the major takeaway being that the dot plot has changed towards two rate hikes in 2023 in the preceding of zero. Expectations heading into the release was a 50/50 call that the Fed would change to just 1 rate increase in 2023. Therefore, with the dot plots a lot more hawkish relative to expectations, USD bears are squeezed as buck funded carry trades unwind. That said, given the size of the move in short order, the greenback is beginning to look overextended.

WAS IT THE FED OR THE FT THAT MARKED THE USD BOTTOM
I noticed at the start of the month there had been an increase in"demise of the buck" coverage and coincidently, that has marked the low point in the greenback (up 3% since report printed ). As I said previously, this may be a common occurance where an advantage performs in the complete opposite direction in regards to exactly what a magazine cover'd signalled. The contrarian view being that after a story is exhibited on a magazine cover, the storyline is normally well embedded on the market and arguably run its program.

Looking ahead to next week, with there being on the economic calendar, I guess markets will continue to digest the Fed surprise. Upside risks likely to persist for the greenback versus low producing currencies (EUR, CHF) and if equities extend losses in what's generally a seasonally weak time for risk assets, commodity currencies could be expected to weaken further.