Tuesday, March 17, 2015

More thoughts about FOMC: new forecasts and “dot plot”

     More thoughts about FOMC:  new forecasts and “dot plot”
    The FOMC meeting will also include the quarterly update to the FOMC’s economic forecasts, including the famous “dot plot” of Fed funds rate forecasts
    Members are likely to lower their 2015 inflation forecasts and therefore their Fed funds estimates too. But they still expect rates to rise much faster than the market does
    Assuming they remove “patient,” I look for Yellen to clarify the decision and explain what FOMC will be looking for in deciding when to start raising rates

     DXY longs, AUD shorts hit record on COT report
    Speculators in US futures now record long DXY, record short AUD, short all currencies except RUB. Stretched positioning could signal a (temporary) turnaround

     BoJ admits temporary defeat
    BoJ admits CPI inflation expected to be “around 0% for the time being”
    But sticks with current policy; still only 1 dissenter
    Either BoJ will have to up stimulus later in the year or govt will push for weaker JPY

     RBA minutes show members believe rates might be cut later
    Market wasn’t wrong, just early – I remain bearish on AUD

     Today:
    Eurozone: German ZEW survey; both indices expected to rise; could support EUR

    US: Housing starts for Feb expected to slow, while building permits expected to rise, consistent with improving housing market.

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