FX attention moves to Fed funds rate
9/21/2016 2:28:41 PM
The attention moves to the Fed now that the BoJ has thrown out their monetary base structure in favor of "Yield-Curve Control." Only time will tell if Kuroda's new shift in policy will be a success. It looks that Japanese policy makers are expecting that the Fed will be doing most of the heavy lifting.
In spite of the probabilities for a Fed rate hike occurring being very low this afternoon; if Yellen and company happened to surprise the markets it would be a great wake up call for all asset classes. Bond yields would possibly be least effected given the recent back up in yields, equities can afford to give up some of the summer premium, while FX moves could see the largest moves because of the contained ranges in Q3.
After the Fed it's the Reserve Bank of New Zealand's (RBNZ) turn (05:00pm EDT). Governor Wheeler is expected to leave the RBNZ's cash rate unchanged at +2.0%, while again repeating that additional policy easing is probable to be required. While recent Kiwi development data has come in stronger than expected in Q2, this alone will not be enough to balance weak inflation. Maybe the Kiwi will be knocked from its lofty perch.