21 Aug 2013
Flash: What to expect from FOMC today – UBS
FXstreet.com (New York) - Judging by the scale of dollar weakness so far this weak, it appears that markets are geared up for a soft set of FOMC minutes, notes Gareth Berry, a Research Analyst at UBS.
Key quotes
“Our economists expect the text to reflect the ‘slight’ dovish changes to the statement. However, the base case is still for a September ‘pre-announcement’ of tapering.”
“Nonetheless, our economists also ‘expect the July 30-31 minutes to keep alive the debate about timing’. The usual nods to inflation and labor thresholds aside, one feature of the July statement was a reference to mortgage rates, which the Fed noted had ‘risen somewhat’.”
“Like its peers, the Fed has shown discomfort with trends in interest rates or a specific instrument, but in a policy/guidance context, this doesn’t appear enshrined in the same way as the ECB (front-end EONIA) or BoE (future base rate pricing). Should this change and/or the FOMC identifies another target, the dollar will respond.”
Key quotes
“Our economists expect the text to reflect the ‘slight’ dovish changes to the statement. However, the base case is still for a September ‘pre-announcement’ of tapering.”
“Nonetheless, our economists also ‘expect the July 30-31 minutes to keep alive the debate about timing’. The usual nods to inflation and labor thresholds aside, one feature of the July statement was a reference to mortgage rates, which the Fed noted had ‘risen somewhat’.”
“Like its peers, the Fed has shown discomfort with trends in interest rates or a specific instrument, but in a policy/guidance context, this doesn’t appear enshrined in the same way as the ECB (front-end EONIA) or BoE (future base rate pricing). Should this change and/or the FOMC identifies another target, the dollar will respond.”