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Trading the hike of the decade by FOMC - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 16, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at TDS, is in line with the consensus in expecting that the Fed will increase the fed funds target range to 0.25%-0.50%.

    Key Quotes

    “We see a less than a 10% chance that the Fed takes a pass on raising rates at this meeting. The market broadly shares this expectation, with a roughly 80% probability of a hike priced in. As a result, the focus will be on the tone of the Fed’s message and expectations for the timing and magnitude of future hikes.”

    “The statement and SEP should be relatively hawkish. The Fed will look to project confidence through better macro forecasts, an ongoing dot plot showing four hikes in 2016 and likely less scope to downgrade longer-term dots than many expect. The theme of data dependency and gradualism would need to be strengthened to drive a more dovish interpretation.”

    “We expect Yellen’s message in the press conference to be more balanced than the statement
    as she reinforces the Fed’s caution about the future path for rates, reiterating the “gradual” pace of hikes and the “data dependency” of any policy action. At the same time, she is likely to reiterate that every meeting is “live,” leaving the market feeling underpriced for tightening risks in the first half of 2016.”
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