LONG DXY/ USD VS GBP: HAWKISH FOMC LOCKHART SPEECH HIGHLIGHTS
FOMC Lockhart was the 4th Fed this week to imo be relatively Hawkish with his words, most notably reinforcing with the others brexits near-term stability saying "Doesn't Expect 'Brexit' to Have Near Term Impact on Economy" and " So Far 'Brexit' Reaction Largely Orderly".
Most interestingly though was Lockharts view on the FOMC's positioning for future rate increases, saying "Won't Rule Out Two Rate Rises This Year" - which is extremely hawkish given most expect 1 at the most.. Back up this sentiment by insisting that the Fed is "Fed Not Behind Curve, Has Time to Decide on Next Rate Move".
Nonethless Lockhart did somewhat contradict his "rate expectations" by saying "Time for 'Cautious and Patient Approach' to Rate Policy" which surely shouldn't be the case if 2 hikes are coming - that would be on the aggressive side.
All in all, Lockharts comments go hand in hand with my Bullish medium term USD/ DXY view (see previous articles) - I like the USD vs EUR, JPY, GBP, AUD, NZD in the medium term so long DXY/ USD is favoured, even more so if 2 rate hikes were to be realised this year. At current levels short GBPUSD is my favourite expression
FOMC RATE HIKE IMPLIED PROBABILITIES
- On the likelihood of rate increases, in the past 24 hours, from the Federal Funds Rate implied probability curve we have seen rates/ probabilities firm after yesterdays "risk-break" recovery, with a 25bps September/ Nov hike steepening to 17.2% from 11.7%(Wed), and Dec setting new highs at 35.9% from 29.5% (Wed) - Dec also went on to double the probability of a 50bps hike to 5.1% vs 2.8%(Wed), giving Lockharts comments some weight.
FOMC Lockhart Speech Highlights:
-Fed's Lockhart: Fed Not Behind Curve, Has Time to Decide on Next Rate Move
-Lockhart: Time for 'Cautious and Patient Approach' to Rate Policy
-Lockhart: So Far 'Brexit' Reaction Largely Orderly
-Lockhart: 'Brexit' Will Increase Long Term Uncertainty
-Lockhart: Doesn't Expect 'Brexit' to Have Near Term Impact on Economy
-Lockhart: Bond Market Yields Largely Reflect Flight-To-Quality Buying
-Lockhart: Too Soon to Say 'All Clear' for Financial Markets
-Lockhart: 'Brexit' Not a 'Leman Moment'
-Lockhart: Still Expects U.S. to Grow by 2%, Expects More Job Gains
-Lockhart: Economy is 'Performing Adequately'
-Lockhart Says Fed Has Time to Decide on Next Rate Move
-Fed's Lockhart: Presidential Election May Be Boosting Economic Uncertainty
-Fed's Lockhart: Won't Rule Out Two Rate Rises This Year
Most interestingly though was Lockharts view on the FOMC's positioning for future rate increases, saying "Won't Rule Out Two Rate Rises This Year" - which is extremely hawkish given most expect 1 at the most.. Back up this sentiment by insisting that the Fed is "Fed Not Behind Curve, Has Time to Decide on Next Rate Move".
Nonethless Lockhart did somewhat contradict his "rate expectations" by saying "Time for 'Cautious and Patient Approach' to Rate Policy" which surely shouldn't be the case if 2 hikes are coming - that would be on the aggressive side.
All in all, Lockharts comments go hand in hand with my Bullish medium term USD/ DXY view (see previous articles) - I like the USD vs EUR, JPY, GBP, AUD, NZD in the medium term so long DXY/ USD is favoured, even more so if 2 rate hikes were to be realised this year. At current levels short GBPUSD is my favourite expression
FOMC RATE HIKE IMPLIED PROBABILITIES
- On the likelihood of rate increases, in the past 24 hours, from the Federal Funds Rate implied probability curve we have seen rates/ probabilities firm after yesterdays "risk-break" recovery, with a 25bps September/ Nov hike steepening to 17.2% from 11.7%(Wed), and Dec setting new highs at 35.9% from 29.5% (Wed) - Dec also went on to double the probability of a 50bps hike to 5.1% vs 2.8%(Wed), giving Lockharts comments some weight.
FOMC Lockhart Speech Highlights:
-Fed's Lockhart: Fed Not Behind Curve, Has Time to Decide on Next Rate Move
-Lockhart: Time for 'Cautious and Patient Approach' to Rate Policy
-Lockhart: So Far 'Brexit' Reaction Largely Orderly
-Lockhart: 'Brexit' Will Increase Long Term Uncertainty
-Lockhart: Doesn't Expect 'Brexit' to Have Near Term Impact on Economy
-Lockhart: Bond Market Yields Largely Reflect Flight-To-Quality Buying
-Lockhart: Too Soon to Say 'All Clear' for Financial Markets
-Lockhart: 'Brexit' Not a 'Leman Moment'
-Lockhart: Still Expects U.S. to Grow by 2%, Expects More Job Gains
-Lockhart: Economy is 'Performing Adequately'
-Lockhart Says Fed Has Time to Decide on Next Rate Move
-Fed's Lockhart: Presidential Election May Be Boosting Economic Uncertainty
-Fed's Lockhart: Won't Rule Out Two Rate Rises This Year
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