Change Language ▼
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage.71% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Financial market research and analysis
Our analysts have their fingers on the pulse of the world's financial market news.
Spread betting and CFD trading are high risk and may not be suitable for everyone. You can lose all your deposits.
26 Aug 2016
By Ipek Ozkardeskaya
US Hawks vs Doves as Yellen speaks
The FOMC’s Chair Janet Yellen will speak at the Jackson Hole Symposium at 3:00pm London time. Investors world-wide will be seeking and trading any piece of hint vis-à-vis the Federal Reserve (Fed)’s view over the US economy and the future of the US monetary policy.
The US dollar is a touch softer ahead of Yellen’s speech. We expect high, and two-sided price volatility across the currency, equity and bond markets.
Expectations of a September rate hike in the US doubled over the past two weeks. Solid US jobs data, lighter fears about the Brexit, hawkish comments from several Fed members enhanced speculation that the September option is not fully off the table.
The world is wondering how Janet Yellen interprets the current macro situation, especially now that the US economy gives signs of solid recovery and that the major macro risk, the Brexit, is behind us.
In our view, Janet Yellen will certainly keep the highlight on the US economic performance and focus on the macroeconomic data, in order to keep the market alert and fully engaged in the Fed’s decision-making process.
The Fed will be in a position to hike rates when the market will give the green light. In this respect, the most rational way to play is through the economic data, which has printed rather satisfactory numbers over recent months.
As of today, the market gives a 32% chance for an interest rate hike to happen in the US. Although the pricing in the market is rather weak to allow the Fed to eventually act in September, the rising chances suggest that the next rate hike could come sooner rather than later. Yet, it appears that the Fed hawks will perhaps wait for next year, as the market gives a still insufficient 57% probability of a December rate hike.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 71% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.
