Saturday August 8, 2015 - 10:09:51 GMT
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September Fed Lift-Off Increasingly Likely
John M. Bland
Fed Sending Policy Guidance?
It appeared that the Fed might have been sending rate guidance through Atlanta Fed Governor Lockhart early in the week, that a September rate lift-off is in the works. A key point he made was that the bar is high for the Fed NOT to raise rates in September. My feeling is that the Fed time line is for a rate hike before yearend followed by a pause, and then a second hike some time around the middle of 1H16 before pausing ahead of the fall U.S. elections. Regional Central Bank Governors should not be sending policy guidance signals ahead of an important policy decision if their statements do not have the support of the policy board
Forex Market Implications
On Friday, the U.S. released a July employment report that almost precisely met market expectations. While the data were not overly strong, I feel that they were strong enough to keep a September rate hike on track. Presumably, the only remaining hurdle will be the August employment data due early in September. The odds increasingly favor a rate hike on September 19. These expectations should be USD positive. Warning: Weaker equities could be EUR positive if EUR financed trades continue to be unwound.
The upcoming week is a relatively slow period one for major economic data.
-- Monday, August 10, No Major Data
-- Tuesday August 11, DE ZEW Survey, U.S. Productivity.
-- Wednesday August 12, U.K. Employment Survey.
-- Thursday August 13, U.S. and Canadian Retail Sales data.
-- Friday August 14, EZ- final HICP (inflation), July U.S. Preliminary University of Michigan Survey.
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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