TD Securities is out with an FOMC preview. They — along with just about everyone else — expect a 25 bps hike.
They expect the language to be shifted from:
“The stance of monetary policy remains accommodative”
The stance of monetary policy remains somewhat accommodative”
As for the trade, their baseline is for US dollar buying on the headlines but say that may present opportunities:
“We believe that the market is leaning towards a hawkish reaction, owing to recent Fed speeches and elevated positioning in the USD. While we think the Fed maintains the accommodative language and delivers a rate hike, this is mostly priced in now. That leaves a possible asymmetric response in the FX markets where the USD weakens more on a dovish take than rallies on a hawkish one. If the market takes the USD higher on that baseline, we think it offers attractive risks rewards to fade against the EUR,” they write in a note.