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Markets look to Fed for clarity on rate hikes
There was a risk off tone in the currency markets on Wednesday ahead of the FOMC statement later. The Federal Reserve’s open market committee wraps up a two day meeting today and will announce its monetary policy as well as its economic outlook for the US economy. Following this, Fed Hair Janet Yellen will be holding a press conference.
Sterling was one of the best performers while the euro lagged, due to concerns over Greece. The Eurogroup meeting will be held on Thursday but in the meantime investors will focus on the FOMC meeting today.
Investors would like clarity about the impending interest-rate hikes by the Fed. While a rate hike is not expected at today’s meeting, many speculate that lift-off will take place in September. But of course the timing of the first rate hike is very data-dependent. Janet Yellen is expected to reiterate this during her speech today.
US economic data has been improving recently although some data disappointed, especially this week. New home starts data missed forecasts and fell 11.1% to an annual rate of 1.04 million in May, pulling back from a rise in April. However, the annual pace of permits for new construction, a sign of future demand, rose 11.8% to 1.28 million, the fastest pace since August 2007.
The dollar has been trading in a very tight range against the yen as investors are unwilling to enter positions ahead of the risk event of the FOMC today.
The post Markets look to Fed for clarity on rate hikes appeared first on Forex Circles.
