Global macro overview for 26/09/2017

Global macro overview for 26/09/2017:

Recent remarks from the FOMC officials are questioning the Fed's point of view regarding inflation outlook. New York Fed President William Dudley comments were rather hawkish, as he justified his stance, saying that he sees inflation firming up and US economic growth holding steady at a moderate pace. He exactly said: "With a firmer import price trend and the fading of effects from a number of temporary, idiosyncratic factors, I expect inflation will rise and stabilize around the 2.0% objective over the medium term. In response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually." On the other hand, voting member and Chicago Federal Reserve Bank President Charles Evans said yesterday, that continuing with interest rates hikes will be a "misstep." He said: "It's not obvious to me that this is such a transitory event that going to pop back up", so he clearly remains rather nervous about the inflation's outlook. He still doesn't rule out the possibility of a rate hike in the near future, but at the same time, he thinks the inflation's trend may remain uncertain and that in turn indicates that debate about monetary policy will roll on for some time now. In conclusion, the December interest rate hike is rather almost fully discounted by markets, but the future hikes are not that much certain as the inflationary pressures are still below the Fed projected target.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has broken above the technical resistance at the level of 92.67 and it is currently heading towards the next resistance at the level of 93.35. strong rebound in momentum from the oversold market conditions supports the short-term bullish outlook.