Higher-than-expected US inflation data strengthened the case for Fed tightening and paved the way for a stronger US Dollar. Get your weekly $USD forecast from margaretyjy here:
meeting has surged to 89% from 24% a day ago, according to the CME’s FedWatch tool. This is after St. Louis Fed Chairsaid in a TV interview that the central bank should raise rates by 100bps over the next three meetings, inferring that a 50bps hike in March is possible. He also said that he will not rule out the possibility of an emergency rate hike in between the scheduled policy reviews.
Hawkish-biased comments from Fed officials following the inflation data suggests that the Fed may become more aggressive in tightening, and market participants still have time to price in the expectations. During the previous rate-hike cycle, therallied fiercely before the actual rate hike kicked off in December 2015, after which it entered a period of consolidation.
--- Written by Margaret Yang, Strategist for DailyFX.com To contact Margaret, use the Comments section below or @margaretyjy on Twitter