Fed sees 55% September hike odds

CME FedWatch showed on August 6 that markets were pricing a 55% chance of a Federal Reserve rate hike at the September 15-16 policy meeting, leaving traders positioned for another live inflation-and-growth test rather than a settled path for rates. The reading put a concrete number on a market that has been oscillating between signs of softer U.S. demand and concern that price pressures could prove sticky. The euro rose on Wednesday as weaker U.S. data and lower oil prices reduced some near-term tightening pressure, according to VT Markets. Over the next two weeks, investors are set to parse July payrolls, two inflation reports and the minutes from the Fed’s last meeting. ### Why are traders still assigning hike odds above 50%? CME Group says its FedWatch tool reflects probabilities implied by 30-day Fed funds futures prices, making it a market-based gauge of where traders think the target rate may go next. The 55% figure cited on August 6 indicates that participants still see a hike as slightly more likely than not at the September meeting. (cmegroup.com) September 15-16 is the Fed’s next scheduled policy meeting, according to market calendars and Fed-rate tracking pages surfaced in current coverage. That timing matters because the central bank will receive several major data releases before officials gather. ### What changed in currencies and why did the euro move? (cmegroup.com) VT Markets reported on August 5 that the euro edged higher against the dollar as softer U.S. data and cheaper oil pared expectations for further Federal Reserve tightening. The move did not erase the broader debate over September, but it showed how quickly rate expectations can shift when incoming data weaken or energy prices ease. (investing.com) FXStreet separately reported that weaker U.S. labor-market data and easing energy-driven inflation risks tempered Fed hike bets and weighed on the dollar. That account matched the broader pattern described by VT Markets, with traders watching payrolls as the next major test. (vtmarkets.com) ### Which data points matter before the September meeting? Kraken said in an August 5 economic brief that the next two weeks are shaped by a sequence of catalysts rather than a single event. It named jobs data, two inflation reports and Fed minutes as the main releases that could reset expectations. July nonfarm payrolls are due August 7, July CPI is due August 12, July PPI follows on August 13, and minutes from the Fed’s July meeting are scheduled for August 19, according to the same Kraken briefing as republished in current market coverage. (fxstreet.com) The minutes are expected to show how officials discussed the split at the last meeting. (blog.kraken.com) ### What should readers watch in the Fed minutes? The July 29 Fed decision was a hold, and Kraken’s briefing said the minutes due August 19 should show how divided policymakers were. For markets, the practical question is whether officials framed recent softness as enough to delay further tightening or as noise ahead of more inflation risk. (cryptohopper.com) CME FedWatch probabilities can move quickly after each release because the tool is derived from fed funds futures pricing rather than from Fed guidance itself. That means payrolls, CPI, PPI and the minutes can each alter the September odds in real time. ### When is the next clear checkpoint? August 7 is the next immediate checkpoint because the July payrolls report lands then, followed by CPI on August 12, PPI on August 13 and Fed minutes on August 19. (cryptohopper.com) The September 15-16 FOMC meeting is the point at which those shifting market odds will be tested against the Fed’s actual decision. (cmegroup.com)