Monday, September 14, 2015

FOMC: Outcome to dominate activity, risk attitude – Lloyds Bank

FXStreet (Delhi) – Research Team at Llyods Bank, suggest that the result of the forthcoming Fed’ meet is going to dominate the activity of the markets and will determine the risk attitude of the investors.

Key Quotes

“The upcoming FOMC meeting outcome (Thu) provides the central focus for global markets over the course of the coming week. At this juncture, market implied expectations of a 25bp hike reside around 28%, with the actual result also followed by the Summary of Economic Projections (including the ‘dot plot’) and the Chair’s press conference.”

“Despite a clear asymmetric skew in terms of immediate post-Fed market reaction, latest market positioning reports confirm suspicions that many participants will remain sidelined ahead of such heightened event risk. Consequently, pre-Fed market depth is anticipated to prove somewhat ‘thin’. Such a backdrop suggests that intervening risk sector price action, alongside the ongoing supply slate (both corporate and sovereign), can have an ‘outsized’ tactical impact on prices ahead of the FOMC.”

“Consolidation within recent range parameters would appear the most likely course into this key rate decision. While directional risk/reward is viewed as unattractive right now, we would favour leaning on nearby strength - generated, for example, via ongoing BoE APF operations – to set up into the week’s supply events.”
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