Fed Lockhart was cautious on the margin stating one rate hike in 2016 only "could" be appropriate rather than should which echoed the sentiment of the earlier Fed Dudley speech which was alot more hawkish imo. This has helped the USD back off its Dudley induced gain, and refocus on the CPI miss as Lockhart reminded the market that " Some Signs Election Uncertainty Slowing Economy" and " 'Not Locked In' To Any Particular Monetary Policy Outlook Right Now" given the data uncertainty which continue to be the two biggest factors for the USD and future hikes going forward. Fed funds currently imply an p18% sept hike, up from 9% yesterday though - where i expect this to come down still into days end as CPI miss is priced and Fed Dudleys sentiment is faded with th ereal hard data left in traders minds (bearish).
This in mind I continue to be bullish AUD with a 0.78 target (apprx 100pips).
Fed Lockhart speech highlights:
Fed's Lockhart: One More Rate Rise In 2016 'Could Be Appropriate' Lockhart: 'Not Locked In' To Any Particular Monetary Policy Outlook Right Now Lockhart: Optimistic About Outlook, Views 2Q Gdp With Caution Lockhart: Economy's Underlying Fundamentals Remain Healthy Lockhart: Indications 3Q Growth Fixing For A Rebound Lockhart: Doesn't Believe Economic Momentum Has Stalled Lockhart: 2% Growth Environment Now Looks More Likely Lockhart: Uncertainty An Issue For The Economy Lockhart: Economy Closing In On Full Employment, Wage Gains Rising Lockhart: Will Achieve 2% Price Target By End Of 2017 Fed's Lockhart: Some Signs Election Uncertainty Slowing Economy Lockhart: Auto Sales Have Been Going 'Gangbusters' Lockhart: Even at Full Employment, Economy Still Has Labor to Draw On
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Update - Fed Lockhart more hawkish on the margin - wont rule out a Sept hike or 2 hikes this year:
Lockhart: Won't Rule Out September For Rate Rise Lockhart: Expects 'Serious' Debate About Rate Rise In September Lockhart: Still Possible To Have Two Rate Rises This Year Lockhart: If Fed Met Today Would Have Strong Debate Over Rate Rise Lockhart: Possible Two Or More Rate Rises In 2017 Lockhart: Welcomes Reexamination Of Fed Policy Orthodoxy Lockhart: Respectfully Disagrees With Fed's Bullard New Outlook Lockhart: Job Gains Over 150,000 A Month Are Good Lockhart: Seeing Mounting Evidence Of Wage Gains
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