Tag: U.S. Economy

FX Volatility To Pick Up With Growth

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Despite the Federal Open Market Committee voting last week to maintain all of the Federal Reserve’s current rates, some market experts — including this one — are projecting that a rate hike is coming soon, and the Foreign Exchange market could see significant volatility because of it.

Indeed, as we suspected back on July 1, the Federal Reserve, in its release about the policy meeting held July 26-27, signaled that headwinds from Brexit are waning and pointed to diminishing near-term risks. But what does that mean, in practical terms? It means that the Fed is back in business: delivering mildly hawkish rhetoric, while preparing for the next rate hike. Continue reading "FX Volatility To Pick Up With Growth" →

Slip Slidin' Away

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The Federal Reserve's interest rate liftoff schedule for this year is slowly but surely slip slidin' away, like a space launch aborted by bad weather. It makes you wonder which government agency is directing U.S. monetary policy, the Fed or NASA.

The minutes of the Fed's June 16-17 monetary policy committee meeting released July 8 were a lot more dovish than the announcement that immediately followed the meeting. It now looks like a September rate liftoff isn't as baked in the cake as many previously believed just a few weeks ago.

Since then, of course, a lot has changed, almost all of it conspiring against an early rate increase. September is a lot less likely to happen now, and even December looks doubtful. I didn't think the Fed was courageous or confident enough to make a move this year anyway, so the events of the past few weeks make me more comfortable with that position. Continue reading "Slip Slidin' Away" →

Dollar Correction Not Over

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


It was back on 13 April that I highlighted the breaking point for the dollar, which could lead to a dollar correction after a prolonged rally. What was that breaking point? If inflation gauges showed that the strong dollar weighed on the inflation outlook, then the dollar would begin its correction. And so indeed, shortly after, the dollar began to plunge against its European peer, the euro, as investors switched into euro longs and dollar shorts. The reason? Data suggested that the US economy wasn't growing as quickly as expected, and most inflation gauges suggested that inflation still wasn't returning.

And then, two weeks ago, the tide turned once again and investors began dollar buying once more as core inflation nudged up and the Eurozone, with the looming Greek crisis, seemed weak again. But is the dollar correction really over? Don't count on it… Continue reading "Dollar Correction Not Over" →

The Kangaroo Economy

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


One of my favorite Abbott & Costello gags was when Bud cheated Lou out of a winning poker hand by claiming he had a rare "kangaroo straight," meaning he had a 2-4-6-8-10 run, all different suits, while gullible Lou "only" had two pair (watch it on YouTube).

On Wednesday we got another chapter in the "kangaroo economy." The Commerce Department reported that U.S. GDP grew only 0.2% at an annualized rate in the first quarter of the year. That was down from 2.2% in the previous quarter and well off the 5.0% and 4.6% paces, respectively, of the two quarters before that. But it was in line with the first quarter of 2014's drop of 2.1%. Continue reading "The Kangaroo Economy" →

Fed Has Plenty of Excuses Not To Do Anything Soon

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


If you're among the vanishing minority of people who still think the Federal Reserve is going to start raising interest rates in June, the latest reports on the U.S. economy and events in Europe and China should disabuse you of that farfetched notion.

The proportion of economists predicting the Fed will wait until September to raise rates rose to 70% in an April 3-9 survey, more than double the figure from the previous month. That ratio has likely gotten even wider following the news of the past week, although I think it will be well after September before the Fed starts "normalizing" monetary policy.

Let's look at the U.S. economy first, where indicators continue to come in soft. Continue reading "Fed Has Plenty of Excuses Not To Do Anything Soon" →