Market participants just scaled back their expectations of interest rate rise from the Federal Reserve after May’s payroll report showed job gains of just 38,000 and previous two gains revised down by 59,000.

Today, Federal Open market Committee (FOMC) will announce interest rate decision at 18:00 GMT.

Let’s look at how the market is pricing the hikes this year, heading into the meeting.

Current FED funds rate stands at 0.25-0.5 percent

• June, 2016 meeting – Market is attaching 100 percent probability that there will be no hike today.
   
• July, 2016 meeting - Market is attaching 79 percent probability that rates will remain at 0.25-0.5 percent, and 21 percent probability that rates will be at 0.5-0.75 percent

• September, 2016 meeting - Market is attaching 64 percent probability that rates will remain at 0.25-0.5 percent, 32 percent probability that rates will be at 0.5-0.75 percent, and 4 percent probability that the rates will be at 0.75-1 percent

• November, 2016 meeting - Market is pricing 62 percent probability that rates will remain at 0.25-0.5 percent, 33 percent probability that rates will be at 0.5-0.75 percent,  and 5 percent probability that the rates will be at 0.75-1 percent

• December, 2016 meeting - Market is pricing 44 percent probability that rates will remain at 0.25-0.5 percent, 41 percent probability that rates will be at 0.5-0.75 percent, 13 percent probability that the rates will be at 0.75-1 percent, and only 2 percent probability that the rates will be at 1-1.25 percent

Hike expectations have shifted downwards sharply across the meetings. As of now, the market is pricing just one hike this year and that in December. This is in sharp contrast to FED’s expectations of two hikes.

The dollar index is currently trading at 94.81, down -0.1%, heading into FOMC.