FOMC: Officials continue to talk a good game over the prospects of a near-term rate hike - ING

Research Team at ING, notes that the FOMC officials continue to talk a good game over the prospects of a near - term rate hike, with even former Fed Chair Alan Greenspan adding to the debate by stating that rates “have to s tart to move up” (and perhaps fairly rapidly) .

Key Quotes

“Yet, despite the “Dudley dent” in risk appetite earlier this week, markets were wary of being fooled twice and have broadly shrugged off the more recent hawkish talk. As we suspect, the next major threat to the current benign market conditions will likely be the upcoming US jobs report (2 Sep); comments from Dudley suggested that this holds a greater weight in the Fed’s reaction function than the weak 2Q GDP figure.

Until then, we expect the risk environment to remain fairly conducive, with ZAR and RUB set to benefit the most within the EM FX universe given their high-beta nature.”