TD Securities Sees Dollar Slipping After Fed Likely Holds Rates
The Fed is expected to keep rates at 3.50%–3.75% on July 29, but TD Securities warns markets overprice a surprise hike and the dollar could weaken if the Fed confirms a hold.
The Federal Reserve under Chair Kevin Warsh is widely expected to leave its benchmark rate at 3.50%–3.75% at the July 29 FOMC meeting. Warsh will announce the decision and hold a 2:30 p.m. ET press conference that traders will watch for any change in tone ahead of core PCE inflation and second-quarter GDP data due July 30.
CME FedWatch data shows roughly a 95%–98% probability of no rate change. If the Fed holds, it would mark the fifth straight meeting without a change since Warsh replaced Jerome Powell in May.
TD Securities says futures and other market instruments currently embed an inflated chance of a July hike. The firm points to higher oil prices and rising U.S.-Iran tensions as factors that have added a geopolitical and commodity risk premium to rate markets.
TD Securities expects markets to reprice once the Fed confirms a hold. The firm warned that if current hike pricing persists through the decision, the gap between market bets and the Fed’s action would rank among the largest of the past decade. TD Securities projects roughly a 2% decline in the dollar in the back half of 2026 if policymakers remain on an extended hold.
The bank’s view rests on the assessment that policymakers will require clearer, sustained evidence of stronger inflation and labor-market momentum before moving back toward rate increases.
The dollar outlook has implications for other assets. Bitcoin fell to an intraday low of $62,684 before recovering to about $63,660, a roughly 2% decline that erased about $134 million in bitcoin long positions in a single day.
Mike McCluskey, co-founder of TX and a former Fidelity executive, described the setup: “The market has been patient for six weeks. This is the week it finds out if that patience was warranted.” He said a hold with hawkish language or an unexpected hike could push bitcoin back to $58,000–$60,000, while a hold with dovish language, strong AI-related capital spending and constructive PCE data could lift bitcoin to $68,000–$70,000 into August.
The Fed decision and the July 30 economic releases will determine whether traders keep current pricing or adjust to the Fed’s guidance.
The material on GNcrypto is intended solely for informational use and must not be regarded as financial advice. We make every effort to keep the content accurate and current, but we cannot warrant its precision, completeness, or reliability. GNcrypto does not take responsibility for any mistakes, omissions, or financial losses resulting from reliance on this information. Any actions you take based on this content are done at your own risk. Always conduct independent research and seek guidance from a qualified specialist. For further details, please review our Terms, Privacy Policy and Disclaimers.
Articles by this author
