US Fed Preview: Ping Pong Policy – ING

By FXStreet FXStreet (Delhi) – Rob Carnell, Chief International Economist at ING, suggests that this forthcoming FOMC meeting was always likely to be too soon for another hike.

Key Quotes

“Indeed, the collapse in global risk sentiment since the beginning of the year, and softer run of US data makes even a March hike look improbable. And unless there is a strong turnaround in the data soon, the two rate hikes we have pencilled in for June and 4Q16, look in need of a serious trim, whilst the four hikes the Fed implies with its dot diagram look totally unrealistic.

Indeed, even if it does nothing now, the ECB’s stance could well see the USD strengthen further, something we doubt the Fed will be too happy about given the weakness in the manufacturing sector. There is not too much the Fed can do with the FOMC statement – this is a very limited document. But if the Fed does nothing, the USD will likely appreciate by default.

One way the Fed could provide some push back against the ECB, pending their next press briefing, would be to re-insert a version of the line they last used in the September 2015 meeting, when concerns about …read more

Source:: FX Street