FXStreet (Bali) – As Nomura’s FX Strategist Jens Nordvig notes, as we get closerr to the September FOMC meeting (six weeks away), the market will soon be forced to make up its mind.
Key Quotes
“We have been pricing close to 50% probability of lift-off in September for some time, and that is by definition not sustainable much longer. Most likely, the Fed will seek to guide the market before we get into the blackout period, which starts September 7.”
Mr. Lockhart’s comments on Aug 4th, which hinted at a preference for lift-off in September, are an example of this, and it did indeed move the market meaningfully, both in rates and FX space. The bottom line is that we are entering a very “binary period.”
“If the data is strong and/or Fed comments are constructive over the next few weeks, we will price September as the central case. If, on the other hand, the data disappoints, September can be priced out almost entirely, and we may even have doubts about lift-off in 2015 altogether.”
(Market News Provided by FXstreet)