Hot Topic – FOMC August 2016

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Investors eyes are turned to Wednesday’s FOMC minutes release on July’s monetary policy meeting

  • Everyone will certainly be on the lookout for whether the comments are hawkish or dovish
  • Last month’s meeting had some conservatively positive words “near term risks to the economic outlook have actually diminished”
  • Analysts are expecting even more positive comments this time around on the state of employment and the economy
  • Targets set by the Fed for an increase to interest rates include 2% growth in the economy, 4.7% unemployment rate and the PCE inflation rate at 1.7%
  • Currently we have actually GDP tracking at 3.5%, the last NFP came in at 4.9% and June’s core PCE rate is at 1.6%.
  • This is all good news for dollar bulls as they sharpen their horns.
  • However, after disappointing retail sales and producer price data, some analysts are expecting the Fed’s wait-and-see approach to raising interest rates to continue
  • So far this approach has actually been holding the dollar back, as has actually this recent disappointing data
  • On Wednesday we’ll get a much better indication on the committee member’s feelings towards a rate hike for this year, and positive comments may see the greenback streak ahead of its trading pairs
  • Most other central banks are looking to ease very than tighten monetary policy and this divergence of monetary policy around the globe will certainly make for some lopsided forex markets – giving some terrific trading opportunities.
  • The GBP/USD in particular will certainly be interesting to watch as the Bank of England has actually brought in more quantitative easing.
  • Last week the cable fell by 1.2% and since the Brexit referendum on 23 July its lost a massive 13%.

The write-up Hot Topic – FOMC August 2016 appeared initial on Forex.Info.

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