Home September hike still on the cards after FOMC Minutes –
Opinions

September hike still on the cards after FOMC Minutes –

The FOMC minutes were  released early and dealt a blow to the greenback on the lack of conviction for a rate hike.

But could we have expected something really  hawkish? The team at CIBC provides some answers:

Here is their view, courtesy of eFXnews:

The Fed couldn’t be THAT hawkish in July, or they would have raised rates then and there, but the minutes of that meeting certainly were in line with a central bank that was nearing an inflection point, with “most” saying “conditions were approaching that point.” “Several” felt that we were already at or very close to full employment. Only “some” were described as feeling that there was not enough confidence that growth would be sufficient to pull inflation back to 2%, citing international developments (which have since darkened a bit) or concerns about the zero lower bound if new shocks hit the economy. On the economy itself, the discussion had an “on the one hand, on the other hand” flavor to it, with plusses and minuses mentioned on most fronts at home and abroad. The catch is that the committee placed an emphasis on needing “more evidence” that the economy “had firmed enough” to support a rise in inflation over time.

Doves will point out that this meeting came before the Chinese devaluation, which while not monumental, has raised more questions about the health of one key player in the global economy, as well as the further downturn in oil that will weigh on near-term inflation measures.

We’re sticking with our call for a September rate hike, but the gap between the minutes and their release, as well as some of the question marks raised in the meeting on inflation, will give the doves a bit of comfort today.

Avery Shenfeld, CIBC WM Economics

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.