When will the FED clear up the intentions

August 23, 2016

The US Dollar rebounds on Monday after the rate hike optimism was boosted on Sunday, as the FED vice-chairman Stanley Fischer claimed that the state of US economy should be somewhere near its targets – full employment and 2% inflation.
Futures on the US Dollar, which track the currency against 6 major peers but primarily against the Euro, bounced as they got support at the 94.00 level but lost momentum near the 94.90 level, turning downwards during the London session on Monday.

Stanley Fischer along with the New York FED head William Dudley was part of the “rate increase bloc”, as they once again advocated decisive approaches in resolving the rate hike issue pointing out that the US labour market proved to be quite resilient in the global economic changes. “The behaviour of employment has been remarkably resilient,” he said, adding that the inflation outside of food and energy prices was “within hailing distance” of 2% in the FED’s target.

Despite upbeat outlook of certain FED members the common FED stance may still remain cautious. Investors are waiting for the speech of Janet Yellen in Jackson Hole on Friday which will clear up the FED intentions towards a possible monetary tightening in this year. The US Dollar may regain some of its lost positions throughout the week on the expectations of Yellen’s comments, which will bring clarity to the rate hike issue.

Meanwhile, the Oil futures halt rally showing signs of a moderate correction, the WTI -2.59% at 47.84, Brent -2.89% at 49.41. The Gold also extends its decline as Decembers futures fell 0.52% to a 1,339.05 level.

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