While it was no shock that the Federal Reserve took no action during its latest two-day meeting, the FOMC Statement itself gave several important clue about the future of policy after displaying a progressively more hawkish stance. The key aspects worth mentioning include the diminished “near-term risks” to the outlook alongside a strengthening labor market and moderate economic expansion. The economy is also expected to continue growing, helping to raise the probability of a rate hike before the end of the year. Even though Fed Funds futures are only pricing in a 46.40% probability of a rate hike before the end of the year, Kansas City Fed President Esther George dissented during the decision, believing that a 25 basis point hike was indeed warranted. While the dollar did not buy more interest rate normalization, losses propelled gold higher, with the yellow metal trading just shy of $1340.00 per troy ounce.
More Hawkish Fed Sends Dollar Tumbling
Daily Analysis - 28/07/2016