The theme of a Fed lift-off has been dominating markets this year and today’s FOMC meeting is of critical importance to traders as markets wait to see whether or not the Fed will remove “patience” from its language, and in doing so, open the door to a potential June rate-hike.
Current pricing see a 50% probability of a June lift-off and this bias is boosted by the much sooner than expected decline in US unemployment alongside US equity markets pressing recent highs.
However, recent inflation and growth data haven’t been as encouraging. The Fed is also presented with difficulty in terms of risks stemming from the USD’s swift surge, stresses in key emerging markets and negative rates in Europe and must factor in how economic and financial stability will be affected if it does indeed raise rates sooner.
The Fed may indeed remove “patience” from it’s language but signal that a rate-hike will be data dependent and therefore, not guaranteed fro June.
There is also the chance that recent USD strength will have proved enough for the Fed to remain “patient” a while longer, to the huge disappointment of USD bulls.
There is an awful lot to consider around the Fed Lift-Off and tonight’s meeting is critical, indeed USD longs are near record highs going into the meeting and although the Fed has been pretty consistent recently, any surprise will invite high volatility.
With such an important market event, you need the very best critical analysis and trading ideas immediately, so join @LFXSAM and myself @LFXJames as we take in the whole meeting live over twitter and give you our breakdown and what is happening and how we are trading it.
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