Fed Funds Rate Predictions
It is still all about interest rates in the market right now so that's what I'll keep talking about. The downward adjustment to US interest rate expectations will weaken the dollar in the near term as the market expects an August Fed tightening to weaken to below 50% unless incoming US economic data comes out very strong. Here are the latest predictions:
Source: Federal Reserve Bank of Cleveland
Notice how the probability of a 5.50% rate increase during the Fed's August meeting dropped a few points between June 27 and June 30. All it takes is a few points to cause some major market ruckus. Look at what happened to EUR/USD within the same time period...
A few points caused a massive 270+ pip move! Yowzers!
It might be a little early, but here are the current predictions for the September FOMC meeting.
Source: Federal Reserve Bank of Cleveland
This is a great graphical example of what "clueless" looks like.
Related Posts:
- U.S. Interest Rate Expectations 14:48 30 July 2006
- How Interest Expectations Affect the Dollar 21:46 11 June 2006
- Fed Rate Hike Predictions 19:21 16 May 2006
- Fed Funds Rate Predictions 21:49 25 June 2006
- Central Bank Expectations 00:51 07 August 2006
Forex Blog: Piponomics
