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Shift of rate hike expectations to mid-2015 could deepen USD correction - Investec

FXStreet (Łódź) - According to Jonathan Pryor, Corporate Treasury Analyst at Investec, the fact that the FOMC minutes signaled to the investors that the Governing Council won't tighten policy soon could bring about a deeper USD correction in the near-term.

Key Quotes


"The US Central Bank’s meeting minutes were released last night from the 16-17 September meeting. One key takeaway for markets was that Fed members struggled to amend their ‘forward guidance’, in particular, what to do with the ‘considerable time’ phrase, which indicates how long rates are likely to be held at current levels after QE ends."

"That debate implies that the committee is not about to tighten policy soon and that it harbours real concerns over a market reaction resulting in tighter financial conditions."

"This had a large response across currencies paired with the US Dollar, seeing it weaken across the board, in GBP/USD we saw a 100 point rise overnight."

"Investors will be cautious to bet on a US rate rise much earlier than the current mid-2015 expectations and this could lead to a slightly deeper US Dollar correction before the end of October meeting that will mark the end of quantitative easing."

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