FXStreet (Barcelona) – Derek Holt of Scotiabank, previews the key risks ahead for the dollar – Yellen’s address on Friday, FOMC Minutes, and other Fed member speeches.
Key Quotes
“Key will be Friday’s interview with Fed Chair Janet Yellen during which she will address the economic outlook. Before then, minutes to the June 16-17 FOMC meeting will be released on Wednesday. They should be treated as stale before the sharp deterioration in Greek debt negotiations, and probably irrelevant in the wake of the pending Greek referendum regardless of the outcome.”
“Recall that the famous dot plot was revised in ways that left the median fed funds target forecast unchanged for yearend 2015, but the dots that did move all moved lower and that signalled less conviction toward the cumulative pace of hikes this year and the exact timing for lift-off. One possibility was that Chair Yellen lowered her own forecast to be among the five expecting just one hike by year-end and other top FOMC officials may have followed her into the one hike in 2015 camp. What would support this view is that Chair Yellen noted in her press conference that “My colleagues and I would like to see more decisive evidence that the moderate pace of economic growth can be sustained.” That may mean that they want considerably more GDP data but it remains uncertain whether a firm estimate for Q2 growth would be enough (in support of September) or if that also means they want to see Q3 data (in support of December).”
“Again, however, other Fed speak on the week should be weighted more heavily than the minutes in light of rising international risks including USD strength since the last meeting. Other Fed speak will include Governor Lael Brainard who speaks on Thursday and while her focus will be on regulatory reforms, she has previously weighed in with a cautious bias and is likely to repeat that should any reference to the outlook or markets accompany her comments. Four regional Fed presidents will also weigh in including one voting member (Williams), two officials who vote come January (Rosengren and George) and Kocherlakota who is a retiring dove.”
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