7 Jul 2015
What's the connection between Grexit and Fed hike expectations? - Deutsche Bank
FXStreet (Bali) - Alan Ruskin, Micro strategist at Deutsche Bank, notes that the risk resilience for Grexit should translate in less impact in reducing the Fed’s probability of tightening.
Key Quotes
"Another feedback loop from the market’s relative sanguine risk response to recent Greek events is that it means Greece should have marked less impact in reducing the Fed’s probability of tightening this year."
"The market has already scaled back Fed expectations of a 25bp September tightening to 24% and a December first 25bp tightening to 83%. The good news for the USD is that the scale back in Fed expectations will probably not come down much more without weaker US data, even under a slow drift toward Grexit."
Key Quotes
"Another feedback loop from the market’s relative sanguine risk response to recent Greek events is that it means Greece should have marked less impact in reducing the Fed’s probability of tightening this year."
"The market has already scaled back Fed expectations of a 25bp September tightening to 24% and a December first 25bp tightening to 83%. The good news for the USD is that the scale back in Fed expectations will probably not come down much more without weaker US data, even under a slow drift toward Grexit."