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The markets put on March

Dare the fed to tighten?

01.Mar.17 11:21 PM
By Swan


The markets put on March
The day before the dollar has strengthened its positions and retains the fighting spirit in the first day of spring. Moreover, the catalyst of purchases of foreign currency was not a performance to trump Congress and hawkish hints from the fed. The American President essentially repeated his previous statements, confirmed the intention to reduce taxes, increase infrastructure spending, etc. the Lack of new information or details economic plan did not cause a significant market reaction, but, at least, did not disappoint.

Meanwhile, trigger purchases USD was aggressive rhetoric fed U. Dudley. It is noteworthy that he belongs to the camp of "doves" (with voting rights), and because the call to raise rates out of his mouth sounded suddenly, prodigalities about change of attitude within the Committee. Earlier, as we remember, she Yellen surprised the markets with its confident tone, although, as a rule, the fed has adopted a more cautious approach.

If the regulator is really preparing the markets for a rate hike this month, in the next two weeks the dollar will be stronger, because the policy tightening at the next meeting have not yet fully incorporated in the price. After review Dudley futures rates showed a rapid growth in the likelihood of improvement in March from 50% to almost 80%.

This week is scheduled a lot of speakers, the fed, the bulk of which will be broadcast on Friday Evans, Lacker, Powell, Fisher, Yellen. And the General tone, which will ask Bank officials likely to confirm that the U.S. monetary authorities to think seriously about normalizing monetary policy this month, in order to prevent overheating of the economy. If so, then the end of the current five days trading USD could reach new heights. In the case of EURUSD, it threatens the loss of the 1.05 level, break of which will cause the development of bearish momentum.

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