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Focus on possible language changes in FOMC statement - BNZ

FXStreet (Łódź) - Raiko Shareef, economist at BNZ, believes that should the Fed decide to remove the phrase "considerable time", referring to the period between the end of asset purchases and rate hikes, from the statement tomorrow, the USD would push higher.

Key quotes

"First and foremost, the Fed is due to cease purchasing assets as of this meeting, a move that has long been priced in."

"In the very unlikely event that policymakers choose to extend the programme for another six weeks, the USD would be sold heavily."

"The more debatable change is whether or not Fed Chair Yellen and her colleagues keep in place the reference to 'a considerable time' between the end of asset purchases and rate hikes. Despite the best efforts of Fed officials to deter market participants from reading too much into that phrase (and instead focusing on the data), its removal would undoubtedly see a knee-jerk jump in the USD."

"Our view is that asset purchases will end at this meeting, but the 'considerable time' phrase will remain until the December meeting, where Yellen can explain its removal at the accompanying press conference. In essence, we are looking for a statement that is, very little changed from September."

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