USD might see a big push higher if June FOMC favours a September hike – SG

FXStreet (Barcelona) - Kit Juckes of Societe Generale, believes that any signal from the Fed for a September rate hike in the June 17 FOMC Meeting will likely give the dollar a big push higher.

Key Quotes

“If the May data round, which kicked off strongly with the rise in the manufacturing ISM to 52.8, shows further strength in tomorrow's non-manufacturing figures and then in the Labor Report on Friday, all eyes will turn to the FOMC meeting on June 17. A signal that the Fed is on track for a September rate hike unless things change, would give the dollar a big push as the US rates market prices in the rate cycle with a higher, flatter curve.”

“The key word, of course, is ‘if'. Markets have been waiting for Fed lift-off for so long that no-one takes anything for granted, through I do believe there's a certain amount of weariness around the issue that has market participants thinking that the rate hikes are ‘priced in' to FX and equity markets, despite the US rate curve itself pricing an implausibly pedestrian pace of tightening.”