FOMC Minutes due at 2 pm ET (1900 GMT)
When something is 100% priced in, there's only one way for the market to move.
The Fed funds market has fully priced in a 25 bps hike on December 14 and sees a 2% chance of a 50 bps hike.
The FOMC Minutes will likely help to confirm that bias but I just don't see a case for buying the US dollar on anything that solidifies the current expectations.
Instead, what might trip up markets is something that indicates that a hike isn't a done deal. Remember, Hillary Clinton was in the throws of the FBI investigation when the Fed met and anxiousness about the election was high, so the commentary might sound more cautious than the market is anticipating.
Does that make a case for selling the US dollar ahead of the headlines? Probably not. Even if it dips lower on the kneejerk, there will be plenty of buyers lurking to grab the dip.
Signals on 2017
If the commentary is hawkish regarding December the next focus will be on signals about 2017 and how many hikes might be coming.
Again, I think there is some risk of disappointment but market pricing isn't so aggressive that betting against the dollar on the headlines has value.
Looking at Fed funds, a 28% chance of a March hike is priced in and that rises to 62% by June and an 87% chance of at least one hike in 2017.
Wild cards
The final thing to watch is for any new hint on normalization. All these numbers are based on Fed funds target ranges, rather than the traditional hard targets. Perhaps they will signal a move towards a hard target later? Or there could be something about selling assets.
It's almost surely premature to have those discussions but those are wild cards that could drive the market reaction.
