FX Comments

Currency markets were, for the most part, restrained today, as traders held tight ahead of tomorrow's key Fed meeting. The Canadian Dollar, however, jumped early in the U.S. session on word of troubles with BP's Alaskan oil operation. The Futures market remains confident that a pause is in store, currently pricing only a 16% chance of a .25% rise. Expect significant volatility if another rise is announced at 1:15 Central time. Whether the last rise was last month, or in store for tomorrow, it is easily to argue that the Dollar may have a difficult time ahead. With many other banks, notably the Bank of England, still in hiking mode, the medium-term rate outlook is increasingly "Dollar negative." Unlike most Fed meetings, the actual rate announcement will be just as significant as the follow-up commentary.