Fed: Takeaway to boil down to a few key signals - TDS
The takeaway from the Fed will boil down to a few key signals, according to Mark McCormick, North American Head of FX Strategy at TD Securities.
Key Quotes
“First, the signal on the neutral is critical since it signals a possible endgame over the next few years. We think the median longer-term dots drop to 2.75%. Second is whether the Fed still feels the policy stance is accommodative. Any modification to that language would be a dovish surprise.”
“We are not downplaying that there will be some hawkish elements to the meeting. Indeed, the 2018 dots could show more support for a fourth hike but the market is already pricing in two more hikes next year after today's meeting. The dots already imply an overshoot of the terminal rate above 3% and we simply think the bar is high for a hawkish surprise.”
“That means there is plenty of room to fade any knee-jerk reaction, but on balance, we think the USD ends the day lower.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
