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18 Mar 2015
FOMC: Expect passing volatility, but little net impact - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, breaks down the key events for the day ahead, noting that the FOMC meeting could produce some passing volatility but have little net impact overall given policy is sure to be on hold.
Key Quotes
The Australia calendar is quiet. China Feb property prices data will be released at 12:30 Syd/9:30 local. The significant weakness in the market has been improving in tier 1 cities, but elsewhere, developer asking prices need to fall further to lower stock. Japan Feb trade balance will be released at 10:50am Syd, with the deficit expected to widen in seasonally adjusted terms.
The calendar for the UK is crowded. BoE minutes could see hawks beginning to dissent again, starting to push for immediate rate hikes. The Feb employment report will be released. Unemployment is expected to fall from 5.7% to 5.6%, with employment rising and earnings rising. Chancellor Osborne will present the 2015 pre-election budget.
The FOMC meeting could well produce some passing volatility but have little net impact, given that policy is sure to be on hold, while Chair Yellen should use plenty of caveats on the policy outlook in her press conference. The removal of the word ‘patient’ from the statement has been so well flagged that it would be a true shock (slamming USD) if it is retained. Ongoing robust job creation should reassure Fed members that recovery is on track while the inflation outlook is little changed. But activity data outside the employment report has softened, with Westpac’s US data pulse index below 50% since end-Dec. While removal of ‘patient’ means each meeting from April onwards is ‘live’ for a rate hike, even hawks are only talking about June. We lean towards Sep.
Key Quotes
The Australia calendar is quiet. China Feb property prices data will be released at 12:30 Syd/9:30 local. The significant weakness in the market has been improving in tier 1 cities, but elsewhere, developer asking prices need to fall further to lower stock. Japan Feb trade balance will be released at 10:50am Syd, with the deficit expected to widen in seasonally adjusted terms.
The calendar for the UK is crowded. BoE minutes could see hawks beginning to dissent again, starting to push for immediate rate hikes. The Feb employment report will be released. Unemployment is expected to fall from 5.7% to 5.6%, with employment rising and earnings rising. Chancellor Osborne will present the 2015 pre-election budget.
The FOMC meeting could well produce some passing volatility but have little net impact, given that policy is sure to be on hold, while Chair Yellen should use plenty of caveats on the policy outlook in her press conference. The removal of the word ‘patient’ from the statement has been so well flagged that it would be a true shock (slamming USD) if it is retained. Ongoing robust job creation should reassure Fed members that recovery is on track while the inflation outlook is little changed. But activity data outside the employment report has softened, with Westpac’s US data pulse index below 50% since end-Dec. While removal of ‘patient’ means each meeting from April onwards is ‘live’ for a rate hike, even hawks are only talking about June. We lean towards Sep.