29 Jan 2015
Fed call for patience won't hurt the US dollar - UBS
FXStreet (Córdoba) - The UBS analyst team commented that yesterday’s FOMC statements backs the idea the Federal Reserve will be the first major central bank to hike rates since the global crisis, lending further support to the US dollar.
Key Quotes
“The Fed sounded upbeat about US economic activity and job gains, and while it foresees a near-term drop in inflation, it still expects inflation to subsequently rise to 2%. Interestingly, for the first time, the Fed added it was monitoring international developments.”
“While the FOMC likely views the stronger dollar as one way international developments hurt US growth, this comment is not, in our view, an attempt to talk down the greenback. We interpret it as a broad recognition of slower global growth, probably including lower oil prices (which help US growth)”.
“Overall, it does not surprise us that the USD went up after the statement. We believe markets have priced in Fed rate hikes this year, as well as further ECB easing. Thus, the statement affirms our view that the EUR/USD will trade around 1.10–1.15 in 2015”.
Key Quotes
“The Fed sounded upbeat about US economic activity and job gains, and while it foresees a near-term drop in inflation, it still expects inflation to subsequently rise to 2%. Interestingly, for the first time, the Fed added it was monitoring international developments.”
“While the FOMC likely views the stronger dollar as one way international developments hurt US growth, this comment is not, in our view, an attempt to talk down the greenback. We interpret it as a broad recognition of slower global growth, probably including lower oil prices (which help US growth)”.
“Overall, it does not surprise us that the USD went up after the statement. We believe markets have priced in Fed rate hikes this year, as well as further ECB easing. Thus, the statement affirms our view that the EUR/USD will trade around 1.10–1.15 in 2015”.