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8 Sep 2015
Fed’s lift-off in September losses momentum – TDS
FXStreet (Edinburgh) - According to Strategists at TD Securities, the possibility that the Fed could hike rates this month continues to shrink.
Key Quotes
“The market is pricing a 1-in-3 chance that the Fed begins policy liftoff in two weeks and we do not see much in the way of data to alter that pricing dynamic until the next top tier data releases on the 15th and 16th (retail sales and CPI)”.
“A hike would unsettle markets we think, but even if the Fed does not hike it risks sending a very cautious signal”.
“Most will perceive the absence of a Fed hike as concern over global growth, and in particular China (and today’s trade balance report does not help)”.
“But, in an environment where the Fed does not hike until early next year we find it increasingly difficult to be long USD in the G10 complex. Selection bias will be key and core USD longs are appropriate against current account deficit currencies (mostly within the commodity complex) while we favor being long currencies that boast a current account surplus”.
Key Quotes
“The market is pricing a 1-in-3 chance that the Fed begins policy liftoff in two weeks and we do not see much in the way of data to alter that pricing dynamic until the next top tier data releases on the 15th and 16th (retail sales and CPI)”.
“A hike would unsettle markets we think, but even if the Fed does not hike it risks sending a very cautious signal”.
“Most will perceive the absence of a Fed hike as concern over global growth, and in particular China (and today’s trade balance report does not help)”.
“But, in an environment where the Fed does not hike until early next year we find it increasingly difficult to be long USD in the G10 complex. Selection bias will be key and core USD longs are appropriate against current account deficit currencies (mostly within the commodity complex) while we favor being long currencies that boast a current account surplus”.