While looking at the current economic situation in US, markets expect better than expected GDP as well as labour market report in coming months. Such favourable economic data lead the Fed to surprise markets positively, which will help underpin the USD via both higher nominal and real rates. Currently market sees only 1.5 rate hikes in 2016. Another major risk ahead of US economy is "Dollar duality".
For an example, if EM / China forecast further FX weakness, this may impact both negatively upon Fed hike expectations and the dollar vs DM. In nut shell, positive bias should be maintained by Fed for further economic growth.
Commentary
Fed would welcome interest rate hike even in 2016
While looking at the current economic situation in US, markets expect better than expected GDP as well as labour market report in coming months. Such favourable economic data lead the Fed to surprise markets positively, …
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