June rate hike overtly priced in: FED speakers could bring down expectations

Looking at recent data from the US it seems that at least immediately the FED does not have a clear case to hike rates (please see table below). The US data surprise index has been falling for the last 45 days while Growth and recent CPI print suggests a cooling off in the economy. On the other hand the Atlanta FED has kept the GDP tracking for Q2 at 4.1% which could be the argument for the FED to go ahead with the hike.

Now with some dark clouds over the Trump administration the economic outlook could weaken further and the FED might want to keep its June decision open. If it enters the final 15 days to the 16^th June FOMC meeting with a 95% chance of a rate hike (as it is now) then there is no decision the FED can make and a rate hike is given. This I assert basis the last 6 years FED policy of not surprising markets. Therefore I would think that FED speakers from now till June beginning might want to talk moderately dovish and bring down FED rate hike expectations from the current 95% to below 70%. This could drive USD index towards 96 levels with the main beneficiaries been JPY. Euro appreciation might be more time taking as ECB still seems to be against an appreciating EURO.

PS: In the last 1 month prior to the March FOMC the FED speakers drove rate hike chances from sub 40% to 80% + before the blackout period. This was of course supported by data as this time the data seems to be building a case for a pause, perhaps.

Parameter	As compared to 2016	Immediate Print
CPI	1	0
ISM Manufacturing	1	0
New Home Sales	1	1
NFP	0	1
Non Manf ISM	1	1
Personal Income	0	0
Consumer Spending	0	0
Real GDP growth	0	0
Retail Sales	0	0
Existing Home Sales	1	1
Manufacturing New Orders	1	0
Total	6/11	4/11
0 means stand alone data does not justify a rate hike and 1 means rate hike is justified. As compared to 2016 views the data absolutely year on year while in the immediate column I try to see if the immediate trend in data justifies a hawkish move or not.