FOMC to offer a hawkish surprise? – TDS

By FXStreet FXStreet (Guatemala) – Analysts at TD Securities explained that the Fed is expected to stay put the September 17th meeting. But, with markets just pricing in a 1-in-3 chance of a hike for the decision we think it is appropriate to prepare for a hawkish surprise as the Fed will likely want to keep 2015 hikes alive.

Key Quotes:

“Note that the analyst community is nearly evenly split on expectations for this week’s meeting.”

“We prefer to express a hawkish surprise through a long USD/JPY position. In the event of a more dovish outcome than is currently priced into markets, we think commodity linked currencies, especially AUD/USD will outperform.”

“Combining these two positions is certainly not without its share of risks and may be suitable only for those with a more aggressive strategy and a higher risk tolerance. However, we think the relative responses of these two exposures—if they behave as we expect—favours gains overall from a total portfolio perspective.”
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Source:: FX Street