FOMC not expected to change guidance before end of QE - RBS

FXStreet (Łódź) - RBS FX strategists Brian Daingerfield and David Simmonds believe that the Fed monetary statement today will not be much different to the one released in July, as the FOMC will most probably wait with changing its forward guidance language until the QE taper finishes in October.

Key quotes

"This would be an immediate disappointment to front-end rates shorts (Eurodollar futures shorts at record levels into this meeting) and USD longs in FX."

"But markets may quickly look through today’s decision and anticipate that significant change is merely postponed."

"A modest 'hawkening' of the Fed’s own 'dot point' Fed Funds rate projections should support this argument even if growth forecasts and statement language are left little changed."

"We anticipate investors quickly using any weakness in the USD on a less hawkish stance today
to position for a more hawkish message tomorrow."