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Could the Fed still target three more rate hikes this year?

business-articlesCould the Fed still target three more rate hikes this year?
  • US retail sales expected to rebound
  • Fed’s Bostic may drop hints on Fed policy outlook
  • RBA minutes in focus
Will rebound in US retail sales strengthen USD?

The US dollar looks poised to advance later this afternoon following the release of the latest US retail sales figures.

Economists forecast that March’s data will see sales growth rebound to 0.4%, up from a 0.1% contraction in February and breaking a three month run of declines.

The uptick in retail sales is likely to be welcomed by USD investors on hopes the stronger end to the first quarter will support an uptick in GDP at the start of the year.

This in turn may bolster speculation over the possibility of the Federal Reserve implementing up to three more rate hikes this year.

Fed’s Bostic to Speak

Speculation over the possibility of the Fed adopting a more aggressive pace of rate hikes this year may find further support today, following a speech from Atlanta Fed President Raphael Bostic later this evening.

The policymaker suggested earlier this month that he believed the Fed should prioritise getting interest rates back to a range of between 2.25% to 2.75%.

Should he strike a similarly hawkish tone in today’s speech then it may suggest that the Fed could be gearing up to accelerate the pace of its monetary tightening programme, potentially strengthening the appeal of USD.

AUD investors await RBA minutes

The Reserve Bank of Australian (RBA) will publish the accounts from its April policy meeting during the overnight session, with any movement in the Australian Dollar depending on how they are received by markets.

The RBA voted to leave interest rates on hold again this month, urging caution as it warned that unemployment may have bottomed out, limiting the potential for it to contribute to further economic growth.

Should the minutes reinforce the bank’s dovish outlook it is highly likely the Australian dollar may fall during the Asian trading session.

Upcoming Data

Monday, 16 April, 2018
13:30                     USD Retail Sales
18:15                     USD Fed Bostic Speech

Tuesday, 17 April, 2018
01:30                     AUD RBA Minutes
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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