FXStreet (Barcelona) – The Team at ING, comments on the key risks in the next week for US, and further expects CPI and industrial production data to favour a September rate hike by the Fed.
Key Quotes
“While the latest US payrolls figure and pick-up in wages has hinted that a Federal Reserve rate hike may not be far away, the minutes to the May FOMC meeting suggested that it won’t be happening on 17 June. After all, “many participants thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied”.”
“While the subsequent jobs numbers, housing and retail sales have improved following the depressed readings from 1Q this, we believe, won’t be enough to convince the Fed that the time has come for rate rises.”
“Furthermore, dollar strength appears to be an issue of growing significance, with the Fed’s Lael Brainard stating that this seems to have had a more dampening impact on the economy than many predicted.”
“In terms of the US data we will have industrial production, which should bounce after five consecutive contractions, while CPI should be boosted by rising gasoline prices, thereby pushing annual inflation up out of deflation territory. With core inflation set to remain at 1.8% YoY the combination of this and strengthening activity mean we favour a September rate hike.”
(Market News Provided by FXstreet)