FXStreet (Edinburgh) – Jim Reid, Analyst at Deutsche Bank, noted market bets on a December rate hike by the Fed continued to scale back.
Key Quotes
“Yesterday did see Fed expectations pushed back once more with the probability of a September move now down to 24% (from 34% on Friday) and a move by December now down to 46% from 61%”.
“It was fitting then that we heard from the Atlanta Fed’s Lockhart last night who dropped some subtle but important changes in his view relative to the last time he spoke”.
“Seen as something of a centrist in the Fed camp and having previously said that he was ‘disposed’ to a September liftoff date, Lockhart appeared to show less conviction on timing yesterday, instead saying that he expects the ‘normalization of monetary policy to begin sometime this year’.
“Touching upon some of the factors affecting markets at the moment, Lockhart made mention of the strong Dollar, tumbling oil prices and the devaluation of the Chinese currency as ‘complicating factors in predicting the pace of growth’.
“As we mentioned yesterday there’s set to be a lot of focus on the Fedspeak now as we creep closer to the September FOMC date and it’s interesting to see one of the more centrist Fed officials hinting at a potential push back in timing in light of the recent events”.
(Market News Provided by FXstreet)