Medium term
Trade view / 21 November 2016 at 13:00 GMT

Fed rate decision: If inflation takes off after a rise

APAC Sales Trading Desk / Saxo Capital Markets
Singapore
Instrument: USDJPY
Price target:
Market price:


    Background


    Should incoming inflation data and inflation expectations continue to rise, the market will be forced to adjust its inflation and rate trajectory outlook moving closer to the Fed's expectations.

    The Federal Reserve will likely adopt a more hawkish tone and begin to bring hike expectations forward further lifting yields and the USD.

    Parameters

    - DXY UP: buy DXYINDEX targeting  110
    - Sell USDJPY risk reversal:
    - Sell 6 month 105 PUT and Buy 6 month 115 Call

    USDJPY five-year chart
    K


    Source: SaxoTraderGO

    Editor's note: Please look at our dedicated rate-hike page for other scenarios that could result from the December meeting of the Federal Open Market Committee.

     
    — Edited by Robert Ryan

    Non-independent investment research disclaimer applies. Read more

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