FXStreet (Delhi) – Research Team at TDS, note that the upcoming US Fed decision is the most telegraphed indecision in history and still the market is not sure what the Pandora box will come out with.
Key Quotes
“This is the most disinflationary world in at least 50 years, global momentum is decelerating, volatility is high, market-based inflation expectations are low, and China collapse fears continue to percolate in the market. This is hardly what the Fed envisioned when they sketched out the scenario where they’d unfurl the ‘Mission Accomplished’ banner for the first hike.”
“As long as the Fed doesn’t rule out tightening this year, we see the US curve flattening and USDJPY moving higher, while not hiking this week will be enough to support EMs to some degree, but it won’t last.”
“What was supposed to be the most telegraphed hike in the history of the Fed has become a market most don’t want to touch with a ten foot pole. And oddly enough in spite of that, sentiment across the market seems to be that while the majority have drifted into our camp and now see a hike this week as unlikely, most would not begrudge the Fed if they simply decided to go ahead and get it over with.”
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