Speculation on a Fed rate hike in December should provide additional tailwinds to the USD - Commerzbank

FXStreet (Córdoba) - The US central bank has clearly signalled that a first interest rate hike in December is not off the table yet. According to Thu Lan Nguyen, analyst at Commerzbank, the market is now focusing on US economic data, especially from the labour market.

Key Quotes

“While investors had basically given up the possibility of the Fed lift-off occurring this year, the Fed – at its meeting on Wednesday – kept the door wide open for a rate hike in December. The change in its statement where it now explicitly refers to a rate move "at its next meeting” has sent a clear signal.

“Obviously, the market is not entirely convinced of a December rate hike, even with the strong signals from the Fed. This is hardly surprising considering the multitude of potential stumbling blocks on the way there”.

“Consequently, the market should shift its focus towards US data where some high-profile releases are due out in the next few days...And with the Fed putting particular emphasis on a labour market improvement, most attention will certainly be paid to the labour market report”.

“Solid payrolls growth as forecast by our economists should increase the markets faith in an interest rate hike and provide additional tailwinds to the USD”.