USD: Supportive Fed - Westpac

Last week’s FOMC statement was USD-supportive, and that could resonate during the weeks ahead, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Fed balance sheet tapering was affirmed, and there was less change in their interest rate projections than markets had expected. Growth for 2018 was actually lifted and Yellen’s press conference made it clear that the Fed continues to expect inflation to push higher soon and that they need to avoid any runaway inflation that could lead to excessive moves later on. This leaves a December rate hike on the table.”

“Key US events this week include regional Fed & flash PMI surveys, Aug existing & new homes data, Aug durable goods an update of 2Q GDP estimates, and Aug PCE data.”

“3 months ahead: Data dependency and hurricane distortions will guide the Fed during the next few months. Market attention is likely to be on the next payrolls and inflation data. Developments in Trump’s tax overhaul will also be a key driver of the USD in Q4.”