Saturday September 26, 2015 - 10:37:09 GMT
Share This Story
Global-View - www.global-view.com
Yellen Rates Are Headed Higher. This Time I Mean It!
John M. Bland
Fed Sending A Tightening Signal
I have been saying consistently that the Fed has been itching to pull the trigger and make a token move in the direction if policy tightening. I feel their initial plan had been to raise rates in September, but instability in global equity markets had caused them to hold off on an increase at that meeting. It might be that the negative market reaction to their excessive caution has set the stage for a rate increase at the October FOMC. Some feel one concern being expressed is that the QE program has injected an enormous amount of excess reserves into the system and want to be careful about how they manage this unprecedented amount of liquidity. Another source of uncertainty has been the mixed messages being sent consistently by Fed Governors. Since the September meeting, we have started to detect a more consistent message from Fed officials. In Yellen's speech at the University of Massachusetts Amherst on Thursday, Chair Yellen sent a signal that a rate hike is likely by year-end. They have to follow through on this signal now or face a serious loss in credibility.
Forex Market Developments
Markets reacted positively to the apparent policy tightening signal by Fed Chair Yellen late Thursday because they took heart from the fact that the central bank finally has the confidence in the economy to start to move away from its emergency funding operations. In the period just ahead, dealers will be keeping a close eye on whether this apparent increased confidence in the financial markets persists. One would think also that rising U.S. interest rates when additional policy ease is expected from other major central banks should be USD supportive. We will see, The week ahead will see the critical monthly (September) U.S. employment data. If strong, they could play a key role in a possible Fed policy tightening decision.
The upcoming week is an active period for major economic data.
-- Monday, September 28, US- Personal Income, PCE Deflator, Pending Homes Sales.
-- Tuesday September 29, JP- Retail Sales, US- Advance Trade, Consumer Confidence
-- Wednesday September 30, DE- Unemployment, Retail Sales, GB- GDP, EZ- flash HICP, US- ADP Private Payrolls, Chicago PMI, Weekly Crude.
-- Thursday October 1, CN- Holiday, Global Manufacturing PMIs, GB- BOE Minutes, US- Weekly Jobless.
-- Friday October 2, CN- Holiday, Global Services PMIs, AU- Retail Sales, US- Employment.
-- Sunday October 4, AU/NZ- Clocks advance one hour.
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
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."