The Federal Reserve will hike the US Interest Rate in December
For reference. Comment below if you agree or disagree. I will make my case using my knowledge on global macro and fundamentals.
Comment:
Looks like they did it.
I prefer .05% increase. (the symbolic initial step for the direction with cautious approach not to deteriorate the global economy.)
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They may raise rates just to show they can - however I await QE4 or equivalent. Interim "rate hikes" will be for show.
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The FRB Chairperson will calculate the backfire and its offset parameters will work how... Then, she will decide for sure. If the result of backfire is greater than postponing, but yet she has no choice if she misses this time but yet extremely difficult decision for her due to the side effect. She has all the data so God helps her and her team.
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At this point the market knows a hike is happening next week, so that is a given and should not be what you will want to look for to make a trade after the event. The key will be the wording regarding the pace of the next hikes, and probably more imortantly the dot plot of the fed memebers interest rate forecasts. If the dots are higher, then USD will have a nice sustainable bullish move for a few session after the initial reaction from the hike.
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adding to this, if the dots are higher, yen should also do well as risk sentiment would probably dip, sending flows into risk havens. So long usdjpy wouldnt be the best place to try and trade the usd strength.... best bet would be against the emerging market currencies, second best would be against the commodity dollars.
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What if next week rate hike doesn't happen ? Yes, I m speculating that it wont happen next week. May be market will be surprised or it will be just me :)
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If they hike interest rates it means economic activity is picking up.Either China & The Fed aren't telling the truth or The Baltic Dry Index is.Take your pick.
http://www.zerohedge.com/news/2015-12-10/lets-just-hope-shipping-isnt-telling-real-story-china#comment-6907222
And then there's this situation:http://www.zerohedge.com/news/2015-12-10/feds-painted-itself-most-dangerous-corner-history-why-there-will-soon-be-riot-casino
Remove up to $800 Billion in liquidity and see what happens.Traders,be very careful coming into this decision:http://www.zerohedge.com/news/2015-12-10/one-week-left-until-feds-rate-hike-nobody-knows-if-fed-can-actually-do-it
http://www.zerohedge.com/news/2015-12-10/lets-just-hope-shipping-isnt-telling-real-story-china#comment-6907222
And then there's this situation:http://www.zerohedge.com/news/2015-12-10/feds-painted-itself-most-dangerous-corner-history-why-there-will-soon-be-riot-casino
Remove up to $800 Billion in liquidity and see what happens.Traders,be very careful coming into this decision:http://www.zerohedge.com/news/2015-12-10/one-week-left-until-feds-rate-hike-nobody-knows-if-fed-can-actually-do-it
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