Tighter US rates could further buoy USD – Lloyds Bank
Analysts at Lloyds Bank, explain that across the Atlantic, the Federal Reserve looks likely to tighten policy again in December and moreover, comments from Chair Yellen, in particular, suggest policymakers are still on course to follow the ‘dot-plot’ implied path, which would see three further interest rate rises next year.
Key Quotes
“This is well ahead of market expectations, which currently only has one hike ‘fully priced-in’. Given that the most recent US labour market report showed a sharp drop in the unemployment rate, to new cyclical lows of 4.2%, and encouraging wage growth of 2.9%, the FOMC if anything, will be more confident in its outlook for the US economy. As such the interest rate differential between the US and UK could widen further, driving the US dollar higher against the pound. A lack of progress on President Trump’s expansionary fiscal policy could take the shine off the USD, but we anticipate some measures to pass through Congress before the end of the year.”
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.
