Fed ready to pull the trigger… China already has – TDS

By FXStreet FXStreet (Delhi) – Cristian Maggio, Head of Emerging Markets Strategy at TD Securities, suggests that the focus of the week is the FOMC meeting on 16 December.

Key Quotes

“After nearly a decade, the Fed is likely to hike 25bps, a decision that the market expects with a 74% likelihood at the moment. This is a substantial rise from the ca. 30% chance that was priced in when going into the prior 28 October meeting, or the slightly higher 45% ahead of the 17 September one.”

“In this respect, one should come to the conclusion that the market reaction will be moderate, as well as specifically that of EMs. Therefore, while the market is prepared to see the lift-off, the focus will be on the tone of the Fed’s message. The overall tone of the communiqué and the accompanying SEP are likely to be relatively hawkish, reflecting the Fed’s greater confidence in the economic outlook and reinforce the path higher for rates. The tone of the post-announcement press conference, however, is likely to be balanced as Yellen delivers the more nuanced message of the “gradual” path for rates.”

“But if the market is surprised in terms of message and guidance, than we should …read more

Source:: FX Street