US Dollar Turns to Fed Speakers Next Two Days for Help
- Fed Vice Chair Stanley Fischer speaks today at 15:15 GMT; previously advocated for two rate hikes this year; likely to come out hawkish.
- Japanese Yen remains quite resilient despite risk appetite improving.
- See the DailyFX economic calendar for the week of September 25 to September 30, 2016.
We haven't discussed the US election at all up to this point in time, but our focus has shifted thus. For me personally, this is an exciting time of year, one of the few times I get to leverage the other side of my double major, my political science degree, into (hopefully) useful information and insight.
So: after the US Presidential Debates last night, the race to November 8 has officially started. There's been a lot of noise at this point in time from both candidates, but historically speaking, polls only begin to matter after Labor Day in the US, and the general public only begins to follow the day-to-day activities of the candidates more closely after the first debate.
Going forward, with each passing day, the polls regarding the election will matter more and more to markets (stocks, bonds, FX - you name it), and in turn, speculation around the Fed will matter less and less. The likely reality is that the November FOMC meeting is just window dressing for the December meeting anyhow - when the new staff economic projections come out - so barring a dramatic shift in US economic data betwwen now and then, the Fed will likely be in a very public holding pattern.
With that said, if there were ever two speakers that could light a fire under the US Dollar this week (which is off of its highs todays as higher yielding currencies pick up ground, which according to mainstream media is indicative of a favorable reaction to Clinton's debate performance), it would be the two top Fed officials: Chair Janet Yellen and Vice Chair Stanley Fischer.
Fed Vice Chair Fischer speaks today at 11:15 EDT/15:15 GMT regarding the US economy, and he's probably one of the more hawkish policymakers that could be speaking. In August at the Jackson Hole Economic Policy Symposium, Vice Chair Fischer suggested that up to two rates hikes could be warranted this year.
We know that the Fed just recently lower its median assessment for the year-end Fed funds rate to 0.60%, suggesting consensus is for only one hike. As such, it's quite likely that Vice Chair Fischer's hawkish tilt - he seems to be the type to express confidence in a hike this year - could help the US Dollar recover ground later in the session today.
--- Written by Christopher Vecchio, Currency Strategist
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