30 Apr 2015
Global backdrop remains supportive for a stronger USD – BAML
FXStreet (Barcelona) - The Team at BofA-Merrill Lynch, predicts further easing in Eurozone, Japan and the EM, which would be Dollar supportive.
Key Quotes
“Our US Rates team’s view that global factors will probably dampen the reaction of long yields as Fed lift-off approaches. Rates at the front end, however, will likely increase this quarter as the activity data improves.”
“Watching over a soft patch, the Fed likely welcomes the imported boost to bond and equity prices as an offset to the stronger dollar.”
“Looking ahead, ECB QE is unlikely to be as powerful a liquidity driver: the so-called signaling effect probably accounted for much of the QE impact, and cannot be easily replicated. Yet our low inflation forecasts suggest the risks are skewed towards further easing in the euro area and Japan, and we look for continued monetary easing in emerging markets.”
“In our view, the global backdrop remains supportive of a strong dollar and muted bond yields for this stage of the US cycle.”
Key Quotes
“Our US Rates team’s view that global factors will probably dampen the reaction of long yields as Fed lift-off approaches. Rates at the front end, however, will likely increase this quarter as the activity data improves.”
“Watching over a soft patch, the Fed likely welcomes the imported boost to bond and equity prices as an offset to the stronger dollar.”
“Looking ahead, ECB QE is unlikely to be as powerful a liquidity driver: the so-called signaling effect probably accounted for much of the QE impact, and cannot be easily replicated. Yet our low inflation forecasts suggest the risks are skewed towards further easing in the euro area and Japan, and we look for continued monetary easing in emerging markets.”
“In our view, the global backdrop remains supportive of a strong dollar and muted bond yields for this stage of the US cycle.”