Wednesday will be dominated by the US Fed's evening decision (7:00 PM) - the most anticipated central bank meeting of the year. The market has almost fully priced in a 25 bps rate hike, the first since July 2023.
Figure 1: Change in Market-Implied Probability of the Fed's September Rate Hike (2025 - 2026)
Source: XTB Research, 16.09.2026
Markets could interpret a pause as the Fed caving to pressure from Donald Trump (meaning a lack of independence for the global financial market's most vital institution). This would result in a further rise in long-term bond yields (noting that 10-year yields reached their highest level since 2007 today) and a return of the debasement trade, a strategy involving a move away from traditional fiat currencies towards hard assets with limited supply, including precious metals and Bitcoin.
Figure 2: 10Y US Government Bond Yields (08.2026 - 09.2026)
Source: XTB Research, 16.09.2026
However, a rate hike does not necessarily mean appreciation for the US currency. Since such a move is almost fully priced in, a relatively hawkish and, most importantly, credible narrative is also needed. If Warsh, as in July, fails to convince markets, bets on further hikes could fall, putting pressure on the US currency.
Figure 3: Market-Implied Fed Policy Rate Path (2026 - 2027)
Source: XTB Research, 16.09.2026
Indeed, this seems relatively likely. The hawkish repricing observed recently was, in our view, overly aggressive. We do not expect the market baseline scenario, namely four hikes from the Fed before the end of the first half of 2027, to actually materialise. Unwinding some of the rate-hike bets would naturally not be good news for the dollar.
Figure 4: Major Currencies vs US Dollar (09.2026)
Source: XTB Research, 16.09.2026
🌏 Key Macroeconomic Publications
Tuesday
Germany
- Germany's ZEW Indicator of Economic Sentiment rose in September to 34.7 pts (slightly below consensus).
- However, the assessment of the current economic situation improved noticeably, with the Current Situation sub-index rising to -47.1 from -61.1 in August, beating forecasts.
Wednesday
United Kingdom
- UK CPI inflation accelerated in August to 3.1% y/y, above July's 2.9%, confirming the trend of rising price pressure linked to the Middle East conflict.
- The main driver of the increase, unsurprisingly, was surging oil and fuel prices.
- Higher airfares, particularly on long-haul routes (which were also largely boosted by the aforementioned fuel prices), further contributed to the rise.
- Despite the acceleration in inflation, the market does not expect a rate hike at tomorrow's Bank of England meeting. We also do not anticipate such a move.
Sweden
- Sweden's unemployment rate rose in August to 8.5%, significantly above the 8.2% consensus and noticeably higher than July's 7.8%, which was the lowest level since November 2024.
- It is worth noting, however, that the August spike should be read in the context of highly volatile readings in recent months; unemployment reached 9.9% in June and 9.4% in May.
📆 Macroeconomic Calendar
Wednesday
- Eurozone: Wage growth in Q2
- Time: 10:00 AM
- Previous reading: 3.4%
- Poland: Core inflation in August
- Time: 1:00 PM
- Consensus: 3.2%
- Previous reading: 3.1%
- US: Retail sales in August
- Time: 1:30 PM
- Previous reading: 5%
- US: GDPNow for Q3
- Time: 4:30 PM
- Consensus: 4.4%
- Previous reading: 4.4%
- US: Interest rate decision
- Time: 7:00 PM
- Consensus: 4%
- Previous reading: 3.75%
- US: Kevin Warsh's press conference
- Time: 7:30 PM
- Brazil: Interest rate decision
- Time: 10:30 PM
- Consensus: 13.75%
- Previous reading: 14%
Thursday
- New Zealand: GDP growth in Q2
- Time: 11:45 PM
- Consensus: 2.3%
- Previous reading: 1.5%
- Eurozone: Speech by Philip Lane
- Time: 8:00 AM
🗂️ Earnings Releases
- Zena Tech ($ZENA.US) - before market open (BMO)
3 Markets to Watch
- USDIDX: A rate hike does not necessarily mean appreciation for the US currency. Since such a move is almost fully priced in, a relatively hawkish and, most importantly, credible narrative is also needed. If Warsh, as in July, fails to convince markets, bets on further hikes could fall, putting pressure on the US currency.
- GOLD: Markets could interpret a potential pause as the Fed caving to pressure from Donald Trump (meaning a lack of independence for the global financial market's most vital institution). This could result in a return of the debasement trade, a strategy involving a move away from traditional fiat currencies towards hard assets with limited supply, including precious metals and Bitcoin.
- OIL: The oil market remains torn between physical supply constraints (pipeline downtime, risk of further attacks) and profit-taking following a dynamic rally.
—
Michał Jóźwiak, Financial Markets Analyst at XTB
Morning Wrap: Market seeks balance ahead of Fed decision (16.09.2026)
Will Trump dissuade Fed from a rate hike? [FOMC Preview]
🟡⬇️Gold loses ahead of Fed decision
Chart of the Day: Gold at five-week lows - what stands behind the decline? (15.09.2026)
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