FXStreet (Edinburgh) – Lee Hardman, Currency Analyst at BTMU, assessed the case of a devaluated Yuan and a rate hike by the Fed.
Key Quotes
“The devaluation of the renminbi has reinforced the US dollar’s broad-based strengthening trend and when combined with ongoing weakness in commodity prices has prompted the US interest rate market to adjust sharply lower”.
“Still the sharp move lower in US yields appears exaggerated in light of the likely impact on the US economy”.
“The probability of the first Fed rate hike being delivered in September has fallen back towards more like “1 in 3”. However in light of the negative developments overseas even dampened Fed rate hike expectations are doing little to prevent further US dollar strength in the near-term”.
(Market News Provided by FXstreet)