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27 Nov 2015
Fed December lift-off seems unlikely to be delayed – Lloyds
FXStreet (Córdoba) - According to analysts from Lloyds Bank despite what the NFP shows, the Federal Reserve is headed toward a rate hike in December while ECB decision is likely to be more important. They warn that strong action by the ECB could push EUR/USD to parity.
Key Quotes:
“Global policy divergence comes into sharp relief. With December’s FOMC meeting still expected to herald the first US tightening of policy in close to a decade (Chart 1), Friday’s US employment report provides the last meaningful opportunity for the data to change the facts on the ground.”
“A firm outturn for November payroll growth and the labour market more broadly is expected. But with FOMC officials having in recent comments lowered the bar for ‘acceptable’ outturns to a range only modestly above 100k per month, a December lift-off seems unlikely to be delayed. Indeed, hardening expectations following a solid report should see a further dollar appreciation, sending the Euro below the recent 1.06 or so.”
“Yet, Thursday’s ECB policy decision is likely to be even more important as it seeks to address a disappointing outlook for Eurozone inflation. If the ECB is able to meet ever-increasing market clamour for a big policy loosening, a move towards parity could loom.”
Key Quotes:
“Global policy divergence comes into sharp relief. With December’s FOMC meeting still expected to herald the first US tightening of policy in close to a decade (Chart 1), Friday’s US employment report provides the last meaningful opportunity for the data to change the facts on the ground.”
“A firm outturn for November payroll growth and the labour market more broadly is expected. But with FOMC officials having in recent comments lowered the bar for ‘acceptable’ outturns to a range only modestly above 100k per month, a December lift-off seems unlikely to be delayed. Indeed, hardening expectations following a solid report should see a further dollar appreciation, sending the Euro below the recent 1.06 or so.”
“Yet, Thursday’s ECB policy decision is likely to be even more important as it seeks to address a disappointing outlook for Eurozone inflation. If the ECB is able to meet ever-increasing market clamour for a big policy loosening, a move towards parity could loom.”