75bps for next FOMC meeting? 100bps?

In early September, the dollar's currency value remains enormous. While the Eurozone and the United Kingdom have been unable to rebound from the year's negative sentiment. The issue of growing energy prices will not be resolved quickly; how will this effect the US Dollar? The Fed raised interest rates by 75 basis points last week. Following the announcement of the Core CPI yesterday, various news outlets reported on the possibility of a 100 basis point rate rise on next FOMC meeting this month.

Hawkish fed means bullish US Dollar?

Despite falling fuel prices, price pressures in the United States remained persistently high last month, indicating that the Federal Reserve has more work to do to restore price stability and provide long-term relief to U.S. households, whose budgets have been squeezed by the cost-of-living spike that has occurred for much of the first half of the year. Core CPI is still rising despite not including gas and food prices. Food prices is rising at a rapid rate last month. US Dollar index (DXY) jumped from 107 to 109 , indicating the market pricing in the 75bps rate hike. Bitcoin and eurusd also gone south quickly.

Retail sales across the United States surprisingly climbed in August after dropping the previous month, although the underlying picture of spending proved more muddled. The value of overall retail sales climbed 0.3% last month after falling 0.4% in July, according to Commerce Department figures released Thursday. Retail sales were up 0.8% excluding fuel. These values have not been adjusted for inflation. According to the median forecast of analysts polled by Bloomberg, retail sales will fall 0.1%. According to the survey, eight of the thirteen retail categories rose last month, including an increase in car dealer sales.

According to the Federal Reserve, the job market and consumer demand for goods are holding up rather well in the face of significant interest-rate hikes and historically high inflation, providing policymakers more cause to keep raising borrowing rates aggressively.

Data released earlier this week showed the magnitude of the central bank's inflation challenge, with consumer prices rising faster than expected in a broad-based gain. Investors remain confident that the Fed will raise interest rates by 75 basis points next week for the third time in a row, with a 100 basis point increase possible.

How will 100bps impact forex market and crypto market?

As this article is published, it is unclear whether the market has already priced in for 100 bps. USD is gaining fast and rapid this week and it looks like 75 bps is already priced in to the market. It is very clear that the Fed will not be taking dovish stance this FOMC meeting.

Aggressive interest rate hikes are not ideal for crypto currencies, and analysts believe the volatility will remain in the short to medium term.

Since the beginning of 2022, risky assets such as stocks and cryptocurrency have been highly connected. Both have been moving in lockstep this year, with investors fleeing in reaction to increasing interest rates, growing inflation, and the possibility of a recession. If the stock market falls as a result of another rate rise, the crypto market is likely to follow suit.

If this is the case then expect a bearish movement for Eurusd, Gbpusd, and Bitcoin.

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