12 Dec 2014
Key events ahead: FOMC decision, Japanese elections – TDS
FXStreet (Barcelona) - Jacqui Douglas, Senior Global Strategist at TD Securities notes that another super-majority for Abe may put further pressure on JPY, while commenting on the key events to take place in the week ahead.
Key Quotes
FOMC Decision (Wed 17 Dec):
“Confidence in a stronger recovery is rising, and while Fed is not tone deaf to risks, the probabilities are still skewed to a positive outcome. The underlying imperative is to better align the prevailing bias at the Fed with market expectations that are viewed as too complacent. That means less dovish.”
“We look for forward guidance to be tweaked and “considerable time” to be dropped from the post-meeting statement. New language on forward guidance will capture the spirit of “patient,” but the Fed will opt to use other verbiage to draw distinction between the 2015 and 2004 tightening cycles. Press conference, Summary of Economic Projections, and dots round out this meeting. In the case of the latter, we do not expect any shift higher in 2015 dots.”
Japanese Elections (Sun 14 Dec):
“The elections are more important to clear the hurdle to Abe moving his agenda forward than any real risk around the outcome of the election itself. With the victory out of the way, Abe will have consolidated his power and mandate further and would be able to move ahead his agenda of fiscal and political reforms.”
“Another super-majority for Abe may put modest downward pressure on JPY, as it would signal a continuation of the current stance of monetary policy for the BoJ, at least in the short term.”
Key Quotes
FOMC Decision (Wed 17 Dec):
“Confidence in a stronger recovery is rising, and while Fed is not tone deaf to risks, the probabilities are still skewed to a positive outcome. The underlying imperative is to better align the prevailing bias at the Fed with market expectations that are viewed as too complacent. That means less dovish.”
“We look for forward guidance to be tweaked and “considerable time” to be dropped from the post-meeting statement. New language on forward guidance will capture the spirit of “patient,” but the Fed will opt to use other verbiage to draw distinction between the 2015 and 2004 tightening cycles. Press conference, Summary of Economic Projections, and dots round out this meeting. In the case of the latter, we do not expect any shift higher in 2015 dots.”
Japanese Elections (Sun 14 Dec):
“The elections are more important to clear the hurdle to Abe moving his agenda forward than any real risk around the outcome of the election itself. With the victory out of the way, Abe will have consolidated his power and mandate further and would be able to move ahead his agenda of fiscal and political reforms.”
“Another super-majority for Abe may put modest downward pressure on JPY, as it would signal a continuation of the current stance of monetary policy for the BoJ, at least in the short term.”