Will Yellen Give a More Hawkish Outlook ?

15 March, 2017

The Fed will announce its interest rate decision and monetary policies, at 18:00 GMT today. Later, the FOMC press conference will be held at 18:30 GMT.

Markets have been expecting a March rate hike for a period, the expectations have been largely priced in since February. Therefore, even the Fed Chair Yellen announces a rate hike today, it would be just in line with market expectations.

The Fed will probably raise rates by 25 basis points this time, to a range of 0.75% to 1%, which is the third time of a rate hike in a decade. However, now what matters more is how many times the Fed will raise rates later this year, and its latest economic projections. The Fed had projected three rate hikes in 2017 in the December FOMC meeting.

The Fed’s two objectives are maximum employment and stable prices. The recent US labour market data shows the labour market remains solid. The inflation has also seen an uptrend since August 2016.

We can expect volatility; however, the volatility might not arise from the rate decision, but more from the updated economic outlook and new projections. If the Fed Chair Yellen makes a relatively hawkish comment, then the dollar will likely keep on strengthening.

Nevertheless, if the Fed surprisingly doesn’t raise rates today, then it will also likely cause great market volatility.

The Japanese industrial production released this morning for January (YoY), reaching the highest level this year.

We will see the release of a series of UK and EU labour market data for January and February, between 09:30 – 10:00 GMR today, which will likely cause volatility to the Sterling and Euro.

It will be followed by US retail sales and CPI data for February, at 12:30 GMT, which will likely cause some volatility to the dollar and the dollar crosses, prior to the FOMC meeting.

On Thursday 16th March, there will be three central banks announce rate decisions and monetary policies. The Bank of Japan, at 02:00 GMT, followed by the Swiss National Bank, at 08:30 GMT. Finally, the Bank of England, at 12:00 GMT.

The market estimates are that the three central banks will likely keep rates unchanged.

Source link  
Markets Look to OPEC

As OPEC began its 2-day meeting in Abu Dhabi on Monday, to align its members to adherence to output reductions, data from S P Platts revealed that Libya and Nigeria pushed OPEC crude...

BoE Lowers UK Growth Forecast

The Bank of England kept rates at their record low on Thursday, following their latest Monetary Policy Committee meeting. However, the BoE cut forecasts...

Beware Profit Takers

On Thursday US durable goods orders were released showing a 6.5% increase, which was the biggest gain in 3 years, resulting in USD clawing back some of its recent losses....

US Inflation Concerns Pressure USD

The Federal Reserve ended its 2-day meeting on Wednesday with, as expected, no change in US interest rates. The Fed commented that US inflation had declined...

No More Easy Money?

On Thursday, the US Commerce Department released GDP (Annualized QoQ) showing a 1.4% annual rate compared to the 1.2% posted in the previous month. This slight increase shows...

Markets listen to Yellen & Draghi

Central Banks are the key drivers of the markets this week as traders focused on comments made from two major central bankers ECB and Fed...

Markets look ahead to US data

Trading in USD was relatively flat on Friday ahead of economic indicators released next week in the US, which will provide...

Bear Territory for Oil?

Oil continued to trade lower on Thursday as traders look ready to test new lows for crude prices with worries persisting over a global glut...

USD Rises as Investor Concerns Abated

Investor concerns, that low US inflation could deter the Federal Reserve from raising interest rates further this year...