FOMC: Policy divide over the future path of policy likely to surface – TD Securities

Mazen Issa, senior FX strategist at TD Securities, suggests that today’s focus shifts to the Fed where the Minutes will take centre stage and TD expects that a policy divide over the future path of policy will surface.

Key Quotes

“We would not be surprised either that the minutes also reveal a debate among some participants who do not believe that the Fed should be cutting at all. We are sympathetic to both sides of the debate, as Powell and co are between a rock and a hard place as far as facing external pressures to ease; both from Trump and the bond market. To this end, we are more circumspect that the bond market will show much sympathy to a division in the Minutes, particularly with so much focus on Powell's appearance at Jackson Hole later this week.”

“We expect the USD on the other hand to show more deference to this division however, and at the expense of EUR and JPY, as neither offer a compelling positive offset at the moment.”