|

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

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.

More from Sandeep Kanihama
Share:

Editor's Picks

AUD/USD extends the range play above 0.7200 as traders await US inflation data

AUD/USD is seen extending its consolidative price move above 0.7200 during the Asian session on Thursday amid mixed cues. Rising RBA rate-hike bets keep the Aussie close to its highest level since May 14. However, hawkish Fed expectations and escalating US-Iran tensions offer some support to the US Dollar, capping the currency pair as traders await US inflation figures.


USD/JPY consolidates around 153.50 as bears turn cautious ahead of US inflation

USD/JPY stabilizes above 153.50 during the Asian session on Thursday, but remains near a seven-month low set earlier this week as hawkish BoJ repricing continues to underpin the Japanese Yen. Meanwhile, rising September Fed rate-hike bets and escalating US-Iran tensions help ease US Dollar selling pressure, offering some support to the currency pair ahead of US inflation figures.

Gold remains in the red, still below $4,400

Gold maintains an erratic trade so far this week, now slipping back below the key $4,400 mark per troy ounce following the stronger US Dollar and a strong rebound in US Treasury yields across the curve, particularly following US Producer Prices and ahead of Friday’s more relevant US CPI data.

XRP slides amid a fragile crypto market structure
Ripple (XRP) falls for the second straight day, trading at $1.37 on Thursday. The broader cryptocurrency market remains fragile as investors weigh the impact of geopolitical tensions in the Middle East, which triggered persistent increases in Crude Oil prices while restricting shipping through the Straight of Hormuz and the Red Sea.
Jobs opened the door for the Fed — inflation decides whether it walks through
The latest US jobs report did not end the debate over the Federal Reserve’s (Fed) next move. It may have done something more subtle: it gave policymakers permission to keep their options open. After months of softer labour market signals, August delivered a stronger-than-expected rebound.
Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.