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Fed inaction seen as a 'hawkish pause'

Monday, September 21, 2015 - 05:50

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A hike in Dec '15 may be pushed out again, but only if the US dollar keeps strengthening, and the S&P keeps falling. This is not necessarily positive for EM FX, but would also favour EM rates in countries where rates tend to be largely independent of FX.

BEFORE the Federal Open Market Committee (FOMC) meeting, the market was considering three scenarios: a "dovish hike", a "hawkish pause" and a "dovish pause".

The FOMC obviously paused, but there is some debate if it was a hawkish or dovish pause.

Personally, we have a slightly more

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