USD: A Brief Rally Into Year-End On A Boost In FOMC Credibility – CIBC

CIBC FX Strategy Research argues that Fed officials are concerned that markets aren’t taking them seriously as investors are increasingly questioning whether FOMC officials will deliver the hikes they promise.

"At the start of 2016 and 2017, markets placed a roughly 25% chance of the Fed hiking three times during the coming twelve months. While they did in fact fail in 2016, they appear on course to deliver this year..

Yet, despite living up to plan, markets are currently pricing an even slimmer chance of three hikes in the 12 months ahead (i.e. December and two more thereafter).

Those odds should receive a significant boost when the Fed does actually move in December, supporting a brief rally in the USD," CIBC argues.

Source: CIBC Economics – CIBC Capital MarketsOriginal Article