Friday October 13, 2017 - 16:04:43 GMT
Share This Story
Global-View - www.global-view.com
Fed Bias In Favor Of A December 13 Rate Hike
John M. Bland, MBA
”Unlawful” Catalonia Independence Vote Wins BigCentral banks continue to be the dominant influence in forex trading and in the financial markets generally. Most appear to be in the process trying to back away from supporting the markets and economies ever since the 2008 financial crisis. Different economies are at different points in their recovery process and those differences are reflected in the different policies of the respective central banks. Last Wednesday, traders focused intently on the Minutes of the FOMC meeting from September 20. The USD seems always now to react strongly to the Fed Meeting Notes because they often send a message which is different from the various official communications made just after the meeting. This time there were no major surprises, but the markets did focus on some of the nuances in the notes. Importantly, many members favor one more rate hike in 2017. The Fed has been signaling its intention to raise the Fed Funds rate by 25bps at its December 13 meeting. This message has gotten out and futures markets have been pricing very high 80% odds of a rate hike in December. Since nearly all Fed decisions are “data-dependent”, it is going to take an unforeseen downward turn in the economy to derail this rate hike. For the record, a minority of the FOMC members continue to fret about the weakness of inflation. They were not comfortable with the view of the majority view this softness is being caused by transitory factors.
Some Fed watchers suggest that a number of Board members are not convinced about the need for a policy tightening. They suggest we keep a close watch on the various inflation reports between now and the December meeting. My view is that a rate hike is currently the “default setting”. At this most recent meeting the Fed also put into motion the final round of gradually winding down its balance sheet to what it plans to be a more normal level of security holdings. It will take a few years to accomplish this.
Catalonia Future Unresolved This week Catalan Premier Puigdemont blinked in his stand-off with Madrid. Separatists in the Catalan Parliaments were hoping for a full-fledged declaration of independence. The talk in the markets is that Puigdemont had no real choice because the EU had made it clear that an independent Catalonia would be isolated. The Catalan Premier suspended the results of the October 1 referendum for a "few weeks" and then called for a period of dialogue. Spain's government only gave Catalonia until Monday October 16 to confirm whether it has declared independence or not. There is already talk about a second referendum. Odds are a second vote would have the same result as the first.
Amazing Trader EVENT RISK Calendar:
Sun 15 Oct
Mon 16 Oct
Tue 17 Oct
Wed 18 Oct
12:30 US- Housing Starts & Permits
Thu 19 Oct
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."