25 Mar 2015
Cautious on USD strength if Fed hikes rates – HSBC
FXStreet (Barcelona) - The HSBC Research Team, suggests remaining cautious on buying USD into the Fed rate hike.
Key Quotes
“The overall impact of a Fed tightening cycle on the dollar depends on whether the tightening is driven by concerns over inflation or to restrain a strong economy. In the former case, the dollar tends to weaken; in the latter case it tends to strengthen.”
“Whatever the overall impact, however, on each of the four previous tightening cycles seen in the past 30 years, the dollar has fallen in the period immediately after the first rate rise.”
“This suggest that we need to be cautious about expecting further dollar strength should the Fed move to raise rates later this year.“
Key Quotes
“The overall impact of a Fed tightening cycle on the dollar depends on whether the tightening is driven by concerns over inflation or to restrain a strong economy. In the former case, the dollar tends to weaken; in the latter case it tends to strengthen.”
“Whatever the overall impact, however, on each of the four previous tightening cycles seen in the past 30 years, the dollar has fallen in the period immediately after the first rate rise.”
“This suggest that we need to be cautious about expecting further dollar strength should the Fed move to raise rates later this year.“