It would appear that Fed Chair Janet Yellen will have her work cut out for her getting members onside for a potential rate increase. Yesterday, a second Fed voting member, Daniel Tarullo, echoed colleague Lael Brainard’s position, stating that it would be inappropriate at this point to raise the key rate, while St. Louis Fed Chief James Bullard argued the opposite. In short, uncertainty continues to grow, and the March 2016 meeting is now favoured for a first tightening of fiscal policy.
This context is obviously unfavourable to the greenback, which lost ground against most currencies. No doubt to the chagrin of European officials, the euro has returned to the highs seen around a month ago despite the announcement this morning of a -0.5% decrease in eurozone Industrial Production in August. Meanwhile the yuan is slumping, with two straight sessions in the red further to new signs of an economic slowdown.
This morning at 8:30, we’ll be taking the pulse of U.S. consumers via September Retail Sales. Then, at 2:00 p.m., the Fed’s Beige Book will give us the point of view from all the various districts.
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