Brocker.Org: CME Group FedWatch’s June hike probability leaped above 80%


CME Group FedWatch tool, which calculates unconditional probabilities of Federal Open Market Committee (FOMC) meeting outcomes to generate a binary probability tree, shows that the probability of a June rate hike jumped to 83.1% from 71.8% on Thursday as the positive nonfarm payroll data from the United States was assessed as a confirmation.

Earlier this week, the chance of a June rate hike was seen around 60%. Following the Fed decision and the monetary policy statement on Wednesday, which essentially ignored the slowdown in the economic activity in Q1, the probability rose above 70%. After recording a dismal growth of 79K (revised from 98K), the number of nonfarm payrolls rebounded strongly in April, increasing 211K. Furthermore, the unemployment rate fell to its lowest level in nearly a decade at 4.4%.

Despite the increased probability of a rate hike in June, the greenback continued to struggle against its competitors, dragging the US Dollar Index to a fresh six-month low at 98.47.