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FOMC: Tapering to be completed, key phrases to be maintained - RBS

FXStreet (Bali) - According to RBS FX Strategists, at Wed's FOMC, tapering is expected to be completed, and the “considerable time” and “significant underutilization of labor resources” language will be maintained.

Key Quotes

"One of the primary reasons for the recent pause in the USD rally has been a
reassessment of FOMC expectations. While real activity data has yet to show signs of meaningful slowing, renewed global growth concerns, higher asset market volatility, and individual FOMC members’ commentary about the strength of the USD have raised concern that the Fed will change its tone about risks to the outlook and future monetary tightening."

"The October FOMC meeting this week will indicate how the FOMC consensus view has changed, if at all. Next Wednesday’s decision does not include new forecasts or a press conference, perhaps limiting the scope of changes the FOMC will be willing to make – we expect tapering will be completed, and the “considerable time” and “significant underutilization of labor resources” language will be maintained."

"Few notable changes in the statement language may imply that the FOMC’s broader view of the outlook has not shifted significantly relative to September, consistent with comments Chair Yellen reportedly made at a private event two weeks ago, which could lift the USD. 3Q GDP growth above 3.0% q/q annualized and a lack of meaningful slowdown in the PCE deflator, similar to the September CPI report, may also prove supportive."

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