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13 Mar 2015
USD strength, a horror show for Fed? – Investec
FXStreet (Barcelona) - With USD strength resuming after yesterday’s correction, Jonathan Pryor, Head of FX dealing at Investec, views that the dollar’s sharp and volatile moves might lead to Fed making specific references to these risks.
Key Quotes
“It is Friday the 13th today, and after some US Dollar correction / consolidation yesterday on weaker retail sales, the strong US Dollar trend resumed overnight, in what may start to become a horror show for the Fed.”
“As we approach the next FOMC meeting on Wednesday evening next week, if we continue to see sharp, volatile currency and asset moves, the Fed may make more specific reference to these risks in its policy statement which is widely expected to see the Fed drop its current 'patient' stance, in relation to the timing of the 1st hike interest rates.”
“Questions were also asked yesterday about whether a third consecutive monthly decline in US retail sales could dissuade the Fed from moving a step closer to rates lift-off next week.”
“The sales numbers look to have been hit by poor weather but the run of weak retail sales releases is nevertheless disappointing. Q1 2014 also witnessed a similar soft weather afflicted run of data but that didn’t stop the Fed tapering its QE program to an eventual end later that year.”
“Will it be enough this year to see the Fed begin to normalise interest rates, in an environment where many major central banks are still easing policy?”
Key Quotes
“It is Friday the 13th today, and after some US Dollar correction / consolidation yesterday on weaker retail sales, the strong US Dollar trend resumed overnight, in what may start to become a horror show for the Fed.”
“As we approach the next FOMC meeting on Wednesday evening next week, if we continue to see sharp, volatile currency and asset moves, the Fed may make more specific reference to these risks in its policy statement which is widely expected to see the Fed drop its current 'patient' stance, in relation to the timing of the 1st hike interest rates.”
“Questions were also asked yesterday about whether a third consecutive monthly decline in US retail sales could dissuade the Fed from moving a step closer to rates lift-off next week.”
“The sales numbers look to have been hit by poor weather but the run of weak retail sales releases is nevertheless disappointing. Q1 2014 also witnessed a similar soft weather afflicted run of data but that didn’t stop the Fed tapering its QE program to an eventual end later that year.”
“Will it be enough this year to see the Fed begin to normalise interest rates, in an environment where many major central banks are still easing policy?”