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Markets quite ahead of FOMC Meeting Minutes

Wednesday, May 20 2015
Without any major data releases, markets are being relatively steady. Sterling is currently being traded around 1.5530 area, euro is few points above 1.1120 level, while Aussie is at 0.79 handle. We cannot expect any greater moves ahead of FOMC Meeting Minutes that are scheduled for a release later today. Fed officials are open but not necessarily transparent when it comes to discussing the timing of the first rate hike — they are leaving that decision to economic data. 
 
U.S. policymakers have warned that a summer rate increase is not off the table. However, many investors seem to be betting that the central bank will not tighten until very late this year or possibly early 2016. Fed funds futures show investors and traders continue to see zero chance the Fed will tighten in June, with the likelihood for September standing at +22% versus 20% on Monday. December’s odds have risen to +55% from +52%, meaning market players essentially see a 50-50 chance of a liftoff in U.S. rates, waiting until next year. 
 
The market expects the minutes to attribute the majority of the slowdown to transitory factors, including unseasonably cold weather. The Fed will be expected to call for a near term pick up in U.S consumption. Last month’s FOMC report showed a more optimistic Fed and that gave the dollar an immediate lift.
More in this category: « Euro testing 1.11 area as a support June rate hike unlikely according to FOMC Meeting Minutes »

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