Central Bank of the United States Worried About impact on markets of the rate decision
the FOMC statement released on April 27 provided few clues on what the Fed members were thinking. The US economy has seen improvement, but after a difficult start of the year, the market had stripped back the number of rate increases to 1-2 this year. This meeting was no press conference so that all investors is due to three weeks later, the minutes of that meeting were published. The story suddenly changed without a central bank commitment with minor changes to a statement, a pro-active FOMC awaited economic recovery enough signal to start another increase in interest rates. Rising rate rose in June from a non-event back on the table and triggered a USD rally. Mixed economic data and in particular the weaker than expected NFP added only 38,000 jobs put back probabilities to single digits.
The tool CME FedWatch shows a 2 percent chance of a change in interest rates, Wednesday, June 15. On July FOMC (no press conference) has a 21 percent rate increase, Sept. 40 percent (press conference), November (no press conference) 42 percent
and December (conference press) 59 percent. It will be interesting to see how the point parcel published Wednesday, June 15 games against market expectations. Given the presidential race will be in full swing in September, it might be less likely that the Fed will act, leaving in July (no press conference) and December (press conference) that clear options.
The market in June Federal Open Committee (FOMC) meeting will conclude with the publication of the statement, economic projections, Wednesday, June 15 at 14:00 EDT. President Janet Yellen will make a prepared statement and questions of address form the financial press at 14:30 EDT. There were multiple signals on the Fed's concern of not wanting to add more volatility in the market, but the perfect window of opportunity for a rate rise begins to disappear which could force the Fed to opt for a FOMC without a press conference or wait until the end of the year once again. .
The EUR / USD has lost 0.666 percent in the last 24 hours. The pair is trading at 1.08 and near the low of the day after investors sold EUR seeking a safe haven in case the Brexit vote wins the referendum next week. US retail sales gave the USD a boost that the latest figures were above expectations. US retail sales rose 0.5 percent and removing the volatile auto component of growth was 0.4 percent.
U.S. consumers continue to have both the confidence and spending needed to keep the US economy on track. The positive results in the economic indicators were more relevant after the miss in the data on employment in early. As the most solid pillar, employment shows signs of slowing down; strong retail sales given the importance of the American consumer could offset the numbers of soft employment.
Central banks chained volatility after the credit crisis. Forward guidance has left no uncertainty about the Fed's statement. With the end of quantitative easing the work of the Fed was more difficult as it requires them to communicate their intentions to the market while sailing in the same waters as changing the remaining investors. The Fed decision combined with the threat of Brexit referendum are the two major risk events and traders should position themselves for a variety of outcomes and hedge their exposure according to their individual risk management plan.
market events to watch this week:
Wednesday, June 15
4:30 GBP Index of average earnings 3m / y
4:30 GBP claimant Count Change
8:30 CAD manufacturing sales m / m
8:30 USD PPI m / M0.3% 0.2%
10:30 USD crude oil inventories
index indicative price NZD TDM
2:00 p.m. USD FOMC economic Projections
2: 24:00 USD FOMC Statement
2:00 p.m. USD Federal Funds Rate
2:30 p.m. USD FOMC Press Conference
6:45 p.m. NZD GDP q / q
7:55 p.m. CAD BOC Gov Poloz Speaks
9:30 p.m. AUD employment Change
AUD unemployment rate
interim Statement of monetary policy JPY
Thursday, June 16
Attempting JPY BOJ Press Conference
3:30 CHF Libor rate
3:30 CHF SNB assessment of monetary policy
3:30 CHF SNB Press Conference
4:30 GBP retail sales m / m
7:00 Votes GBP MPC official discount rate
7: 00 Abstract monetary hours GBP
GBP 7:00 Bank rate
8: 30 USD CPI m / m
8:30 USD core CPI m / m
8:30 amUSD Philly Fed Manufacturing Index
8:30 USD unemployment claims
Friday, June 17
8:30 CAD core CPI m / m
8:30 USD building permits
11:00 EUR ECB President Draghi Speaks
* All times EDT
for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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