Published at 01:47 (GMT) 11 Jul
FT: US Fed is exploring an overhaul of the Federal funds rate – a benchmark that underlies almost every financial transaction in the world – as it prepares for an eventual rise in interest rates.
The Fed funds rate is the main measure of overnight US interest rates and is based on the actual rates reported by brokers for overnight loans between US banks. Fed could redefine its main target rate so that it takes into account a wider range of loans between banks, making it more stable and reliable.
Concerns have grown about the reliability of the Fed funds rate since the Fed began buying trillions of dollars of assets during three rounds of QE.
On FX, good to watch the above, given that Fed is getting ready for rate hike in 2015. After end of QE3 on Oct 28-29 as it tapers off the last $15bln. ($10bln on July 29-30, $10bln on Sept 16-17) from current $35bln.
Could see USD demand as debate, preparation for eventual Fed Funds hike gather pace into 2014 end, after QE3. GBP/USD at 1.7120-23, offers at 1.7150-60, focus still the 6-year highs of 1.7180. BoE unchanged on Thursday - though focus is on whether BoE will hike rate first before Fed or vice versa, in 2015. Bids at 1.7080-00.
EUR/USD at 1.3595-00, concerns over Portugal bank weighing on EUR now, offers 1.3630-50. Bids at 1.3580-90, while ECB remains dovish, with room for more easing. Stops below 1.3570. WL
Recommended Content
Editors’ Picks
EUR/USD holds gains near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.