8 Apr 2015
Credit Agricole: USD remains a buy on dips – eFXnews
FXStreet (Barcelona) - The eFXnews Team notes Credit Agricole views that today’s FOMC minutes might highlight the diversity of views for rate hike seen in the Fed member speeches, and further suggest that USD remains a buy on dips.
Key Quotes
“Ahead today, the main focus turns to the release of the FOMC minutes covering the March meeting. The March meeting saw the Fed remove ‘patient’ from its statement, but it also lowered its inflation and growth forecasts as well as its median policy rate projections.”
“The ‘dots’ moved closer to market expectations for 2015 and 2016 but they still seem way above interest rates implied by the ED curve for 2017 and beyond.”
“Recent Fed speeches further highlighted that there is a considerable array of views on the start and speed of stimulus removal.”
“Indeed, comments about the timing of the first rate hike ranged from indications that both June and September are ‘live meetings’ (Lockhart, Bullard and Lacker) to suggestions that a rate hike will come later in the year (Yellen and Fisher) and even in early 2016, when the inflation outlook will be clearer (Evans). The March minutes should highlight that diversity of views.”
“In addition, investors will look for indications as to whether still weaker growth abroad and a strong USD featured prominently during the discussions. It would take a clear dovish surprise – eg, evidence that the Fed is now worried about the impact from USD or a fallout from a global growth slowdown – to hurt the USD, however.”
“As we see limited scope of falling Fed rate expectations from the current levels, we believe that the greenback should stay a buy on dips.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“Ahead today, the main focus turns to the release of the FOMC minutes covering the March meeting. The March meeting saw the Fed remove ‘patient’ from its statement, but it also lowered its inflation and growth forecasts as well as its median policy rate projections.”
“The ‘dots’ moved closer to market expectations for 2015 and 2016 but they still seem way above interest rates implied by the ED curve for 2017 and beyond.”
“Recent Fed speeches further highlighted that there is a considerable array of views on the start and speed of stimulus removal.”
“Indeed, comments about the timing of the first rate hike ranged from indications that both June and September are ‘live meetings’ (Lockhart, Bullard and Lacker) to suggestions that a rate hike will come later in the year (Yellen and Fisher) and even in early 2016, when the inflation outlook will be clearer (Evans). The March minutes should highlight that diversity of views.”
“In addition, investors will look for indications as to whether still weaker growth abroad and a strong USD featured prominently during the discussions. It would take a clear dovish surprise – eg, evidence that the Fed is now worried about the impact from USD or a fallout from a global growth slowdown – to hurt the USD, however.”
“As we see limited scope of falling Fed rate expectations from the current levels, we believe that the greenback should stay a buy on dips.”
This content has been provided under specific arrangement with eFXnews.