The build up to the September FOMC meeting has been rather intense, the reason? Tapering. But as Saxo Bank's Mads Koefoed explains, there are other elements investors should look out for as well.
One of them is mortgage backed securities, Because US housing data has been "rather weak" over the last couple of months, he expects the Fed to continue at the current rate of USD 40 billion a month.
Unemployment is another area which the Fed will focus on; it dropped 7.3% in August which means it is getting close to the central bank's target of 6.5%. As a result, Mads says they could come out and announce a lower threshold.
Speaking about the Dollar, Mads warns that markets are perhaps expecting a bit "too much" from the Fed and that the US central bank may surprise them with a softer approach than anticipated. This means we could see a weakening in the dollar following the meeting.
Read more about Mads' predictions here:
http://www.tradingfloor.com/posts/fed-preview-dipping-toe-tapering-waters-411025513
Author Mads Koefoed, Head of Macro Strategy, Saxo Bank
Topics Macro, EURUSD, Nonfarm Payrolls, Federal Reserve, Ben Bernanke, Employment, Quantitative Easing, Housing, unemployment, US economy, USD Index, FOMC meeting, stimulus, fiscal stimulus, The Fed, Tapering, QE tapering
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