Fed opts to keep room to manoeuvre
Stock markets rose and the U.S. dollar weakened yesterday further to the release of the minutes of the Fed’s July meeting, which confirmed that Fed members want to have more confidence in their economic forecasts before moving forward with a rate increase. Although the job market is robust and could justify a hike, inflation remains below the 2% target and second quarter economic growth was timid. In summary, a September rate increase is possible, but unlikely. As far as December goes, the futures market currently puts the likelihood of a rate increase at 46%. Obviously, the Fed is not required to move and a number of unforeseen elements may arise in the meantime.
No major news is on the agenda in Canada while in the United States, we will be keeping an eye on Jobless Claims at 8:30. Three members of the Fed will be speaking again over the course of the day. Their comments will be carefully scrutinized and could dictate where the U.S. dollar is headed. Meanwhile, the loonie’s path will be influenced by WTI oil prices, which broke through the $47.00 mark earlier this morning.
