USD: Changing Our Fed Call To 3 Hikes Next Year – Nomura

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The US dollar dropped last week after the FOMC made dovish sounds. Some reached a conclusion that the Fed under Powell will not raise rates anytime soon. Nevertheless, the team at Nomura still see three rate hikes next year and they have a few reasons.

Here is their view, courtesy of eFXnews:

Nomura Research made a change to its Fed call and now expects more interest rate hikes next year and in 2019.

“With the combination of momentum in aggregate demand, tightening labor markets, some evidence of a rebound in inflation, and resilient financial conditions, we think the FOMC will raise short-term interest rates somewhat more over the next two years than we had expected before. Beyond the expected hike in December, we now expect three hikes next year – in March, June, and December – and one more hike in June 2019.

That said, we do not expect FOMC to raise its range for the federal funds rate above 2.25-2.5%. Note that we think this would still be a small overshoot relative to the longterm level of the “neutral” rate. We do not expect any change to the current trajectory of the FOMC’s balance sheet policy,” Nomura argues.

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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 the 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.

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