Over the past several weeks, the financial markets have steadily reduced their expectations for a third hike in December. However, a key influential policymaker and a permanent member of the FOMC committee, New York Fed Governor William Dudley believes that the market is misjudging the possibility of a hike.

In an interview with Associated Press (AP), against a question with related to Fed hike odds for December declining below 50 percent, Mr. Dudley said, “I think it depends on how the economic forecast evolves. If it evolves in line with my expectations, I would expect -- I would be in favor of doing another rate hike later this year.” Since his thinking most of the time aligns with that of Fed chair Janet Yellen, financial markets have picked up his comments as a strong hawkish signal. He has been a major dove last year.

After his comments, the dollar strengthened and the hike odds for December improved. However, the financial markets are still not ready to price a hike in December. December hike off is currently at 49.3 percent, higher by a little more than 12 percent since the comments.