The Fed Will Maintain Its Benchmark Interest Rate Unchanged.

FED officials have warned of the negative impact of the strong dollar over the past year, but foreign exchange traders hinted that the US dollar's two-year upward momentum is losing momentum.

As the dollar hit its lowest level in more than four months last week, hedge funds cut the US dollar long position to at least the lowest level in July 2014.

Data released by the US Commodity Futures Trading Commission (CFTC) on Friday (March 11th) showed that in March 8th, large speculators slash the US dollar net to 112848 contracts, the lowest in July 2014, far below 428298 in November.

CFTC data also showed that in the week of March 8th, the total net worth of US dollar dropped to US $6 billion 880 million, which was lower than US $10 billion for the fourth consecutive week and $7 billion 450 million the previous week.

Foreign exchange forecasters also responded the same way. They now expect the US dollar to be close to the start this year. At the beginning of the year, forecasters expect the US dollar to rise by 2.4% this year.

This shift will provide the Fed policymakers with a clear signal that they still have room to raise interest rates again this year.

"This will enable the Federal Reserve to tighten monetary policy further," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management.

I think the dollar is not a concern for them. "

The agency manages assets of $125 billion.

Vail said she preferred to buy the US dollar against the euro before the Fed's resolution on Tuesday and Wednesday.

Analysts pointed out that the US dollar trend has an important impact on the Fed's resolution: the stronger US dollar will play a role in tightening the financial situation, thereby reducing the power of the Federal Reserve to raise interest rates; the depreciation of the US dollar will play an opposite role, which will help the Federal Reserve further promote the interest rate hike.

The collapse of the US dollar is a big advantage for the Fed officials who insist on gradual increases in interest rates, after the US dollar trade weighted index hit a 13 year high in January.

The Federal Reserve will begin a two day policy meeting on Tuesday. Bloomberg survey shows that 93 of the 97 economists interviewed expect the US Federal Reserve to maintain its benchmark interest rate unchanged.

But the trend of interest rate futures shows that the probability of raising interest rates by the Federal Reserve during the year reached 78%, compared to 30% only 1 months ago.

US dollar against ten major rival currencies: Bloomberg dollar spot

The index has fallen 2.1% so far this year.

The Fed's own US dollar trade weighted index fell by 1.5% in the first week of March, the biggest weekly decline in a year, which brought the index down more than 3% from the January high.

The median expected value of analysts surveyed by foreign media showed that the US dollar index for the six major currencies of the US dollar rose to 98.1 at the end of this year, and the index was 96.6. on Monday.

So far, the ICE dollar index has fallen nearly 5 per cent so far in March, and could create the worst monthly performance since last April.

In the past year, the US dollar has gone up sharply, which is highly concerned by the Fed.

Not only will it be bad for US exports, but it will also curb inflation.

In the past 12 months, the Fed officials discussed the issue of a strong dollar at all 8 policy meetings, especially in September last year when the minutes of the Fed meeting mentioned more than 20 times the US dollar.

A report released in February 26th showed that the annual rate of core inflation of food and energy in January rose by 1.7%, an increase of 1.6% over the Fed's forecast for the end of this year.

As the dollar weakened and the stock market rebounded,

Interest rates rose again during the year.

Although Morgan Morgan expects the fed to wait until December, interest rate futures show that traders believe that the probability of raising interest rates in June will reach 52%, compared to 6% only 1 months ago in December.

State Street Global Markets Ltd.

Michael Metcalfe, head of global strategy, said: "the strength of the US dollar has always been considered to be a constraint to some extent, but I think it is obvious that the dollar appreciation has been lifted so far this year.

Some of the reasons why the Fed should not continue to raise interest rates are now vanished. "

As the pace of achieving the 2% inflation target is getting closer, Stanley Fischer, the US Federal Reserve Chairman, said last week that "we are not far from achieving the goal" and inflation will rise after the US dollar and oil prices stabilize.

Boston at Pioneer Investments monetary policy leader Paresh Upadhyaya betting on the strength of the dollar, he said: "the market underestimated the Fed's interest rate hike."

Driven by the rebound in the stock market and corporate credit markets, the Bloomberg U.S. Financial Conditions Index, which measures financial market pressure, is running positive, the first since then.