Saturday, September 12, 2015

A market fallout from FOMC?- TDS

FXStreet (Guatemala) - Analysts at TD securities explained that there’s limited top tier European data out next week so Fed watching will be the name of the game.

Key Quotes:

"With markets expecting a coin-toss decision (see below), there will be big movements in markets, no matter what happens. Of key importance to Europe will be how the Fed communicates their decision though, rather than just the binary hike or not."

"An increase in the fed funds rate would indicate that headwinds from recent EM market volatility are being broadly looked through, suggesting other central banks might also come out slightly more hawkish than expected in coming months."

"In particular, we’d see an increase on Thursday increasing risks to our call for the BoE to remain on hold until May 2016. For the ECB, however, they are slightly less sensitive to the immediate decision. Inflation prospects remain very weak in the euro area, and in order for the ECB to not extend QE further by December, we’d need to see price pressures build, either through a significant—and sustained—weakening in the euro or a sharp move up in energy prices. In this respect, it will be communication of the FOMC’s medium-term rate expectations (via the dots) that will be key."
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