The Fed minutes released yesterday showed several policymakers said a slowdown in the future pace of hiring would argue against a near-term hike even as members of the rate-setting Federal Open Market Committee were generally upbeat about the US economic outlook. They outnumbered board members who anticipated that economic conditions would soon warrant tightening policy.
The minutes came a day after New Fed President William Dudley said "it’s possible" to raise rates at the September 20-21 policy meeting and Atlanta Fed President Dennis Lockhart said a hike next month is in play. The Fed also has policy meetings scheduled in early November and mid-December. We see the December meeting as the most likely time for a rate increase since it follows the US presidential election.
Investors will now focus on next week's annual meeting of central bankers in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans.
Eurozone prices rose 0.2% yoy, confirming its initial estimate of two weeks ago. Month-on-month, prices fell 0.6% from June. The annual rate remains well short of the European Central Bank's target of just below 2%. Core , which excludes the most volatile components of unprocessed food and energy, was unchanged at 0.8% in July. We expect Eurozone to rise gradually in the coming months.
The USD hit a seven-week low against a basket of major currencies on Thursday, after minutes from the Federal Reserve's July meeting showed policymakers were divided on raising interest rates in the near term. We keep our outlook on the EUR/USD and raised our bid to 1.1180.
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