U.S. Federal Reserve is scheduled to announce its monetary policy decision tomorrow and the rate market is becoming a bit jittery ahead of the meeting. After the UK referendum rate hike probability for this year simply disappeared and some FOMC policymakers indicated that they will be in no hurry to hike rates.

However in recent days, economic surprises from the United States that pointed to a continued recovery both in terms of growth and labour market has increased speculations for a rate hike from Fed in 2016. U.S. economic surprise index as calculated by the Citibank has increased to the highest level since 2014. The market is now pricing almost 50 percent chance that the Federal funds rate will be increased by at least 25 basis points. Odds of a December rate hike has climbed from 12 percent at the beginning of July to 48 percent as of now. This has also led to a lacklustre auction of $26 billion 2 year note. It saw a bid to cover ratio of 2.52.

Fed is unlikely to raise rates at tomorrow’s meeting but may provide a stronger hint of a hike over the upcoming meeting. The hike odds for September is around 25 percent.

The dollar index, which is the value of the U.S. dollar against a basket of currencies is currently trading at 97.02.