The emerging market and commodity currencies took a deep breath as the Fed refrained from stepping out of its long-lasting zero rate policy. The volatility in the global financial markets and the IMF warnings proved to be influential. The Fed admitted that the global rout in commodity and energy prices could rise the downside pressures in inflation. Although the FOMC confirmed that the global inflation outlook has not changed significantly.
We are now shifting toward a higher dimension in data monitoring. The US data will be watched and matched to global data set. The inflation in China and the unemployment in the Eurozone will be as important as onion prices in India and dairy product sales volume in New Zealand. Given the dull economic fundamentals across the globe, it may be hard for the Fed to take the first step before the end of the year. It will be even harder for the market to assess a consensus and to come up with expectations. Fasten your seat belts, a period of high turbulence is right ahead.
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