After months of guessing game, speculation over first rate hike by US Federal Reserve, analysts as well as market participants might face sudden void once that is taken care of as early as December.
- Though a mere 25 basis points rate hike might not make much of a difference from economic and borrowing costs point of view, what could be the impact on the market is pretty difficult to gauge, since it will be a first hike in almost a decade. Moreover, FED balance sheet size is enormous, $4 trillion.
- If FED do hike rates in December, it would be vital to look beyond short term noise. Immediate reaction could be strengthening in Dollar as well as firming of interest rates. However as next hike from FED would be quite a faraway affair (at least 2-3 quarters), market is likely to look beyond and move away from this heavy one sided bets of Dollar longs.
With rate hike taken care off, FED could be dovish in its communication, it would be vital to look through the dust and gauge what could be the next mojo for the market.


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