This month’s most anticipated event is coming up quick with the Fed to release the official Federal Funds Rate and the FOMC economic projections and statement.

The rate is expected to remain unchanged at 0.5% but has had a few pundits calling for rate hike after several FED members having released bullish statement of late. So far this month markets have priced in a bullish Fed with the USD dominating its counter-parties while gold and equities remain subdued.

The build up to the event this week will likely see investors square positions in anticipation of a volatile Wednesday and, absent any more bullish data this week, we expect the USD to give back some of its recent gains as greenback hits support across the board in anticipation of the news.

Until then the BOJ will gives the week’s starter by delivering a tasty Press conference and statement which they will outline their current and future view of Japanese economy and the likeliness of any further stimulus. Should they hint at more stimulus the JPY will weaken rapidly as we see the deflationary expectations filter through. On the other hand should they adopt a wait and see stance, which is likely given its proximity to the Fed announcement, we would see the JPY remain firm.