Foreign exchange spreads tighten as primary dealers express concerns about 2023 recession.

Foreign exchange, crypto currency rates as of 11:35 pm 2 January 2023

Currency Pair	Broker Bid	Broker Sell	Spread
EUR/USD	1.0678	1.0682	.0004
GBP/USD	1.2056	1.2066	.0010
USD/JPY	130.810	130.873	.0630
USD/CAD	1.3557	1.3567	.0010
USD/MXN	19.4793	19.5125	.0332
BTC/USD	16,680.30	16,686.10	5.8000
ETH/USD	1,211.03	1,211.39	.3600
Source: OANDA

Federal Reserve monetary policy tools as of 11:39 pm 2 January 2023

Policy Tool	Rate
Overnight Reverse Repurchase	4.30
Effective Federal Funds Rate	4.33
Interest on Reserve Balances	4.40
Discount Window	4.50
Prime Rate	7.50
Source: Federal Reserve Board, Federal Reserve Bank of New York

According to a survey of primary dealers conducted by the Federal Reserve Bank of New York for November 2022, a median proportion of primary dealers expect the federal funds rate to be approximately 4.625% after the next Federal Open Market Committee meeting.  The meeting is scheduled for December 31-February 1, 2023.

The current fed funds target range is 4.25% to 4.50%.  The current effective fed funds rate is 4.33%.

According to the survey, approximately 60% of primary dealers expect the fed funds rate to fall between 4.26% and 5.25% by the end of 2023.  A significant number of primary dealers expect increases in the fed funds rate to be driven by inflationary pressures.

https://traderswithedge.com/?r=348

Media outlet Mint reported today that most primary dealers expect a recession in 2023 with at least two of the 26 dealers surveyed expecting a recession in 2024.  Among the causal factors are the spending down of pandemic savings by consumers, a decline in the housing market, and a tightening of lending standards among banks.

The Board of Governors of the Federal Reserve System is scheduled to release data on its selected interest rates and foreign exchange at 4:15 pm, 3 January 2023.  

Alton Drew

2 January 2023

For more of my writings, visit my author’s page at amazon.com/author/altondrew and purchase my latest book, “Take It from a Black Man. WASPs Need to Take Back Their Country. Essays on Capital, Democracy, and Political Narrative.”