Quiet week for markets, but we cannot say the same for some Federal Reserve Presidents coming on stage and give us their their thoughts on the banking situation, inflation, and upcoming FOMC Meetings. In a matter of a week Fed Presidents Barr, Barkin, Collins, Kashkari, Williams, Cook, and Waller all spoke, and rates traders were definitely listening.
In a matter of a week, Fed Fund Futures were pricing in a 24% change that the fed will deliver a 25 bps. Unlike Friday's close which now prices a 57% probability of a 25 bps hike.
You have to remember that when rates made by the Federal Reserve increase, the dollar soon follows as international rate traders seek higher yields and rates treasury bonds. Fed Fund Futures have clearly given us a reason that the probability of higher rates is much closer than the latter. Why hasn't the dollar done that yet?
Dollar opened last week at 103.115 and currently sits 52 bps lower at 103.59. The disconnect between rate expectations versus dollar weakness is an area of opportunity this week. My expectation this week is we at least the highs of 103.4 to reprise the federal reserve's speeches this week.
In a matter of a week, Fed Fund Futures were pricing in a 24% change that the fed will deliver a 25 bps. Unlike Friday's close which now prices a 57% probability of a 25 bps hike.
You have to remember that when rates made by the Federal Reserve increase, the dollar soon follows as international rate traders seek higher yields and rates treasury bonds. Fed Fund Futures have clearly given us a reason that the probability of higher rates is much closer than the latter. Why hasn't the dollar done that yet?
Dollar opened last week at 103.115 and currently sits 52 bps lower at 103.59. The disconnect between rate expectations versus dollar weakness is an area of opportunity this week. My expectation this week is we at least the highs of 103.4 to reprise the federal reserve's speeches this week.
