8 Dec 2014
USD – one way bet? – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that the recent NFP data has given USD bulls fresh resolve, with EUR/USD back to 2 year lows and USD/JPY pushing to a 7 year high.
Key Quotes
“The strength of the November non-farm payrolls release has given USD bulls fresh resolve. On the back of the improved US labour market situation, the market is speculating that the phrase ‘considerable time’ will be dropped from the forthcoming Dec 16-17 FOMC statement regarding the period before rates which be hiked.”
“The USD index has pushed back to levels not seen since 2009, EUR/USD is back to levels not seen since July 2012 while USD/JPY has pushed to fresh 7 yr high.”
“We adopted a bullish outlook on the USD at the start of 2015 for the first time in several years.”
“Despite the improvements in the US economic outlook we maintain that the Fed is unlikely to start hiking interest rates until the end of next year, beyond market forecasts of the middle of the year.“
“If the market does push back its expectations of the first Fed hike, this would contribute to volatility in the USD crosses in the coming months and should slow the pace of USD appreciation. That said, we would continue to favour buying the USD on dips particularly against currencies associated with the most dovish central banks.”
"Our 2015 target for USD/JPY lies at 125.00. We are forecasting that EUR/USD will drop to 1.20 and see downside risk on this target. We also expect USD/CHF to push up to 1.02.”
Key Quotes
“The strength of the November non-farm payrolls release has given USD bulls fresh resolve. On the back of the improved US labour market situation, the market is speculating that the phrase ‘considerable time’ will be dropped from the forthcoming Dec 16-17 FOMC statement regarding the period before rates which be hiked.”
“The USD index has pushed back to levels not seen since 2009, EUR/USD is back to levels not seen since July 2012 while USD/JPY has pushed to fresh 7 yr high.”
“We adopted a bullish outlook on the USD at the start of 2015 for the first time in several years.”
“Despite the improvements in the US economic outlook we maintain that the Fed is unlikely to start hiking interest rates until the end of next year, beyond market forecasts of the middle of the year.“
“If the market does push back its expectations of the first Fed hike, this would contribute to volatility in the USD crosses in the coming months and should slow the pace of USD appreciation. That said, we would continue to favour buying the USD on dips particularly against currencies associated with the most dovish central banks.”
"Our 2015 target for USD/JPY lies at 125.00. We are forecasting that EUR/USD will drop to 1.20 and see downside risk on this target. We also expect USD/CHF to push up to 1.02.”