Fed and BOJ Hawkish Stances Meet Volatile Energy Market

The Fed's interest rate decision on Wednesday will be the main event of the week, but its impact is largely priced in. The real focus will be on the updated dot plot and economic projections, particularly from Chairman Kevin Warsh's press conference.

Warsh faces a credibility test as markets are pricing in a 25 basis point hike to the funds rate, with over 90% certainty. If the Fed doesn't deliver, it could damage its credibility and trigger a disorderly reaction in the dollar.

The BOJ's decision on Friday is also expected to be hawkish, with a 25 basis point increase fully priced in. The focus will be on whether the BOJ can sustain the hawkish shift in expectations, particularly from Governor Ueda's press conference.