TheNews

The Fed’s June statement and press conference failed to provide a catalyst for renewed USD gains and the currency has weakened in the aftermath of the meeting, notes BNP Paribas.

"Market participants seemed to focus on the shift lower in the Fed’s projection for the Fed funds rate, with the average “dot” for end 2015 falling to 57bp from 77bp. In her press conference, Chair Yellen noted that the conditions for justifying policy tightening were not yet in place and that, once tightening began, the pace of hikes would be very gradual," BNPP adds.

"However, we would emphasize that, according to the projections, a majority of FOMC members continue to anticipate at least two rate hikes before the end of 2015," BNPP argues.

"Moreover, the message from the Fed is clearly one of data dependency—if data continues to improve over the summer, markets will be forced to bring forward pricing for Fed hikes closer to our September forecast for lift-off," BNPP projects.

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