16 Feb 2015
USD to strengthen in the coming 6 months - Danske
FXStreet (Barcelona) - Kristoffer Kjær Lomholt, Analyst at Danske Bank, comments on the IMM FX positioning, and further retains the view for a strong USD in 6-months, supported by the Fed rate hike expectations.
Key Quotes
“IMM positioning data released on Friday revealed short-covering in the currencies with the largest notional outstanding in the report, namely EUR, JPY and GBP. This has consequently reduced the aggregate bullish USD bets.”
“Importantly, however, non-commercial positioning in the greenback remains at historically stretched levels just below the 99th percentile despite last week’s change in speculative positioning.”
“While this suggests a high sensitivity to USD downside risk, we still expect USD to strengthen in the coming 6M primarily driven by a re-pricing of the Fed, as we find Fed pricing in the markets as too dovish.”
“We expect the Fed to start hiking rates from the historical low in June.”
Key Quotes
“IMM positioning data released on Friday revealed short-covering in the currencies with the largest notional outstanding in the report, namely EUR, JPY and GBP. This has consequently reduced the aggregate bullish USD bets.”
“Importantly, however, non-commercial positioning in the greenback remains at historically stretched levels just below the 99th percentile despite last week’s change in speculative positioning.”
“While this suggests a high sensitivity to USD downside risk, we still expect USD to strengthen in the coming 6M primarily driven by a re-pricing of the Fed, as we find Fed pricing in the markets as too dovish.”
“We expect the Fed to start hiking rates from the historical low in June.”