Federal reserve in tomorrow’s meeting Completely looks in the mood of Increasing the interest rates so how we could see it in near term by having look at some economic data and activities.
As we are looking at the stronger dollar and holdings in the currency market by Non-commercials, in the USD there is more interest in the long term we could see. but is that holding may turn by several indications of U.S economy with such a steps of the rate hike so that we are looking below.
We have many countries who are performing well with their policy implementation and economic functions I have some several examples like Australia, China. Japan, India, South Africa etc they are all improving on the Business Index even as we see Britain, scope after Brexit there is scope to deal a business as to support their economy they are going to work on policy easing. and business friendly policy formulation. So fed rate hike may shade after the short term if the investors find the other assured investment with such a countries.
The Impact of the further Interest rates hike likely to grow investors in the U.S economy but is that really going to be the healthy investment so the answer may be no, Let;s have to look why it is so.
Recently the Draghi’s assurance on the euro zone economy and increasing the recent rise in eurousd represents the stability at which investors are looking in the economy of Europe. There is a possibility of high volatility in the DXY on the decision but stability seems to be earlier after that volatility.and USD weakening may get started with this step.though the investors looking great to invest .it would be limited in the near term as we have the stronger dollar which is stating hard to business
This era of globalization, liberalization and social technology changing the impact of the mood of investors.
below are some keys to understanding Dollar Boost and possible impact due to this dollar .according to the bureau of economic research of U.S
- The deficit is increasing.
- Real GDP
- Increase In Personal Income
- Boosting Nonfarm payrolls
- Business performance
- Inflation is improving to from to 2.5 from 2.1%
- Improving stock market
- Increasing Yield on bonds and recent statement for bond Investors by Chairmen Yellen to not worry gives the minimum impact of the rate hike
- Labor market and decreasing Unemployment means increasingBusiness confidence
- The Policy agenda of U.S is American-centric, quarters.So may ImpactInternational Relations in terms of business
- Labour force participation in increasing
- Balance of trade increases in deficit
- Improved Export
- External Debt decreasing
- Attracting FDI even having the stronger business sentiments
- Business confidence is higher than the previous i.e57.7%
- Producers manufacturing Index 54.218) Non-Manufacturing PMI 57.6.
By considering these points the overall we can see short term encouragement in a case of rate hike so investors may enjoy short-term. And Federal reserve is aware of this that rate hike may see the short-term impact because as we recently seen in the news that fed officials are hinting to increase the rates 3 times through 2017.And there we can say yes the impact is minimum in case rate hike.Maybe they are looking 3 stronger quarters to boost business development.The negative impact can be linked to President Trumps Twitter handlerSecondly why to disagree this rate hike is to having next hint as President himself disapproving rate hike as in his official tweeter handle.
How its suits on their Internal Environment of the economy because it would give more advantages to U.S citizen.and it suits their agenda too i.e America First.
The FOMC is due to announce its next decision on Wednesday afternoon. The target interest rate now stands at a range of 0.5 to 0.75 percent. Even after a quarter-point increase, it would still be low by historical standards.
So Concluding with the view as a forecast, Though the US fed increased their interest rates the Impact would remain short term and may harm investors.The possible consequences are economy may start affecting due to stronger USD gradually in longer term perspective. This rate hike decision would be the start of USD weakening instead of stronger economic sentiments .and in that too they have their own advantage for growth .so this complex nexus created by fed and gathering the storms for attracting investment from the Investors may deciding loose for Investors.So it’s time to be smart.where the investor should know the problematic situation of the US economy to which Fed might be aware. quarters.
We can see commodities may melt Gold could be near 1185 /75 where we could see demand for the level of 1226 and it could keep correcting.