2 Dec 2014
The ECB and BOJ have less capacity to surprise in 2015 – DB
FXStreet (Barcelona) - The Research Analysts at Deutsche Bank note that the USD strength will be even more dependent on the Fed and USD yields next year than any policy related surprises.
Key Quotes
“One piece of good news for USD bulls, is that the strong USD view in 2014 has worked despite being a consensus trade. The bad news is it may have worked for the wrong (i.e. unexpected) reasons.”
“The strong USD story was initially generated by EUR weakness that followed the ECB’s shift to negative rates. Later in the year, the BOJ helped propel USD/JPY sharply. The Fed has been much less of a factor than expected.”
“That the USD has gone up when yields have come down sharply, provides an even better basis for USD strength when US rates head higher.”
“DB’s view is that the extent to which the Fed has not been a driver behind USD strength provides greater scope for the Fed to provide the spring board for a stronger USD driver next year, although this is probably going to be a more compelling story in the spring and beyond rather than Q1.”
Key Quotes
“One piece of good news for USD bulls, is that the strong USD view in 2014 has worked despite being a consensus trade. The bad news is it may have worked for the wrong (i.e. unexpected) reasons.”
“The strong USD story was initially generated by EUR weakness that followed the ECB’s shift to negative rates. Later in the year, the BOJ helped propel USD/JPY sharply. The Fed has been much less of a factor than expected.”
“That the USD has gone up when yields have come down sharply, provides an even better basis for USD strength when US rates head higher.”
“DB’s view is that the extent to which the Fed has not been a driver behind USD strength provides greater scope for the Fed to provide the spring board for a stronger USD driver next year, although this is probably going to be a more compelling story in the spring and beyond rather than Q1.”