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Koefoed: FOMC statement could boost equities and USD

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Saxo's Mads Koefoed believes this Wednesday's Federal Open Market Committee statement will be more dovish than December's. However, he also believes that the market could be surprised to the hawkish side if the FOMC leaves open the possibility for a rate hike in March.

Koefoed believes the committee will have to take into account the current market turmoil. But he says US labour market data continues to look strong. Market expectations for US rate hikes this year have declined to between one and two, says Mads, but he still expects there to be between two and four.

He says that after the FOMC statement, the dollar could strengthen further, hitting EURUSD. He also believes that equities could benefit from a more hawkish statement.