Central Bank Watch: Fed Speeches, FOMC Minutes, Interest Rate Expectations Update

FEDERAL RESERVE INTEREST RATE EXPECTATIONS (MAY 20, 2021) (TABLE 1)

Central Bank Watch: Fed Speeches, FOMC Minutes, Interest Rate Expectations Update

After the April FOMC meeting minutes, interest rates remain well-anchored; all quiet on the western front, as it were. Fed funds futures are still pricing in a 90% chance of no change in Fed rates through January 2022; an insignificant change from the 91% probability the last time this report was updated.

IG CLIENT SENTIMENT INDEX: USD/JPY RATE FORECAST (MAY 20, 2021) (CHART 1)

Central Bank Watch: Fed Speeches, FOMC Minutes, Interest Rate Expectations Update

USD/JPY: Retail trader data shows 52.17% of traders are net-long with the ratio of traders long to short at 1.09 to 1. The number of traders net-long is 5.25% higher than yesterday and 15.51% higher from last week, while the number of traders net-short is 7.82% higher than yesterday and 7.72% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall.

Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias.

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