23 Mar 2015
Road for further USD gains significantly choppier - RBS
FXStreet (Bali) - According to RBS FX Strategists, the monetary policy divergence should still favour further USD strength, although noting that the road may be significantly choppier.
Key Quotes
"With forward guidance further eschewed after the Fed removed “patient” guidance, the USD and Fed expectations should remain highly sensitive to inflation and growth data, with the CPI being the major USD event to watch this week."
"While monetary policy ultimately depends on the data the Fed still sees itself on pace to raise interest rates at some point this year and normalize conditions slowly over the next several years. That leaves the FOMC as still quite hawkish relative to its major central bank peers, particularly after the BoE stepped up commentary about the strength of the GBP. As we remain broadly positive on the outlook for growth, we think the monetary policy divergence can still drive USD gains, albeit the road may be significantly choppier."
"Plenty of Fed speakers are due next week and may give additional context behind the revelation that the Fed is attentive to the potential impacts of the stronger USD on growth and inflation. Fed Chair Yellen is due to speak at a San Francisco Fed conference on monetary policy which will reportedly include a Q&A session. Vice Chair Fischer is also scheduled to speak twice next week."
"US Durable goods orders and the U of Michigan sentiment index are released as well."
Key Quotes
"With forward guidance further eschewed after the Fed removed “patient” guidance, the USD and Fed expectations should remain highly sensitive to inflation and growth data, with the CPI being the major USD event to watch this week."
"While monetary policy ultimately depends on the data the Fed still sees itself on pace to raise interest rates at some point this year and normalize conditions slowly over the next several years. That leaves the FOMC as still quite hawkish relative to its major central bank peers, particularly after the BoE stepped up commentary about the strength of the GBP. As we remain broadly positive on the outlook for growth, we think the monetary policy divergence can still drive USD gains, albeit the road may be significantly choppier."
"Plenty of Fed speakers are due next week and may give additional context behind the revelation that the Fed is attentive to the potential impacts of the stronger USD on growth and inflation. Fed Chair Yellen is due to speak at a San Francisco Fed conference on monetary policy which will reportedly include a Q&A session. Vice Chair Fischer is also scheduled to speak twice next week."
"US Durable goods orders and the U of Michigan sentiment index are released as well."