lundi 16 mars 2015
Does the Fed Have the Patience to Push the Euro to Parity?
Posted on 09:06 by nice news
The Federal Reserve will take center stage this week. It is not the only central bank that is expected to have an impact, but it will be the most significant.
The Bank of Japan concludes its two-day policy meeting on Tuesday while the Bank of England is due to publish its latest policy meeting minutes on Wednesday. U.S. manufacturing and housing data will also be keenly watched this week as both have disappointed in recent months with barely positive average numbers. The key reports are this morning’s industrial production (+0.1% versus +0.3% expected, month-over-month) and tomorrow’s housing starts (expected +1.03 million). Quadruple witching takes place Friday but market moves are likely to start Thursday in preparation.
Over the past 18 months, Fed Chair Janet Yellen and her fellow policymakers has been the dollar bulls’ greatest ally. Will U.S. policymakers be able to deliver or disappoint them come midweek? Investors on Wednesday will be carefully analyzing the statement the Fed releases following its two-day meeting and Yellen’s post-meeting news conference for any hints on when the bank might start raising interest rates.
To date, the market seems evenly divided with 50% expecting a rate “liftoff” to commence in June, while the remainder is backing a September hike. If the Fed drops the word “patient” from its statement on the timing of an interest rate rise, this could pave the way for a move as early as June, adding fuel to the dollar’s surge against the major currencies. The danger is that dropping “patient” from the communiqué would not necessarily mean that the first rates hike would commence in June, despite the U.S. outlook for employment and activity being healthy enough to merit it.
Rate Trajectory to Be Low
Whenever the Fed does begin to tighten, the course of rate hikes should not be steep. Yellen needs to be
The Bank of Japan concludes its two-day policy meeting on Tuesday while the Bank of England is due to publish its latest policy meeting minutes on Wednesday. U.S. manufacturing and housing data will also be keenly watched this week as both have disappointed in recent months with barely positive average numbers. The key reports are this morning’s industrial production (+0.1% versus +0.3% expected, month-over-month) and tomorrow’s housing starts (expected +1.03 million). Quadruple witching takes place Friday but market moves are likely to start Thursday in preparation.
Over the past 18 months, Fed Chair Janet Yellen and her fellow policymakers has been the dollar bulls’ greatest ally. Will U.S. policymakers be able to deliver or disappoint them come midweek? Investors on Wednesday will be carefully analyzing the statement the Fed releases following its two-day meeting and Yellen’s post-meeting news conference for any hints on when the bank might start raising interest rates.
To date, the market seems evenly divided with 50% expecting a rate “liftoff” to commence in June, while the remainder is backing a September hike. If the Fed drops the word “patient” from its statement on the timing of an interest rate rise, this could pave the way for a move as early as June, adding fuel to the dollar’s surge against the major currencies. The danger is that dropping “patient” from the communiqué would not necessarily mean that the first rates hike would commence in June, despite the U.S. outlook for employment and activity being healthy enough to merit it.
Rate Trajectory to Be Low
Whenever the Fed does begin to tighten, the course of rate hikes should not be steep. Yellen needs to be
Does the Fed Have the Patience to Push the Euro to Parity?
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