Fed hike: Why still not fully priced in? – Westpac

By FXStreet FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, suggests that the main question around the FOMC’s decision on 16 Dec now seems to be why it isn’t fully priced in?

Key Quotes

“Market pricing has lingered around 72-75% in recent days despite admirably clear Fed commentary. Fed chair Yellen said “economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market.” She added that when the FOMC starts to raise rates, “doing so will be a testament…to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession.”

Centrist presidents of the San Francisco and Atlanta Feds John Williams and Dennis Lockhart respectively said that a rate rise should be “sooner rather than later” and that the case for action is “compelling.” Perhaps investors are waiting for Friday’s employment report or perhaps the memory of the FOMC’s late change of mind in Sep means traders don’t want to price in a 90%+ chance until just ahead of the meeting, just in case.”

“Admittedly US data has been mixed. As Richard wrote in “Cooler US data trends shouldn’t upset the USD too much …read more

Source:: FX Street