23 Mar 2015
USD profit-taking to accelerate? - SocGen
FXStreet (Bali) - According to the Societe Generale FX Research Team, there could be some decent USD profit-taking in the coming weeks following last week's FOMC meeting.
Key Quotes
The market has been extremely long USD for some time now, and the dovish Fed switch could provide much-awaited and sufficient motivation to trigger decent profit-taking in the coming weeks. Sticking to the big picture, the dollar uptrend is not over and the EUR/USD should ultimately reach parity. However, the road will be bumpier from now, and the first serious hiccup seems imminent.
The Riksbank and Norges bank delivered two contrasting surprises. Sweden is facing an acute deflation conundrum while Norway may only need to regulate price pressure. The Riksbank stands out as the Nordic central bank having the strongest currency war inclinations. Revived monetary policy divergence should lift the NOK/SEK again.
The first SNB meeting since the CHF debacle left policy unchanged, but currency strength and deflation raise the possibility of a liquidity trap. The credibility of future commitments and actions (including FX interventions) should be severely challenged, limiting the scope of CHF weakness
Key Quotes
The market has been extremely long USD for some time now, and the dovish Fed switch could provide much-awaited and sufficient motivation to trigger decent profit-taking in the coming weeks. Sticking to the big picture, the dollar uptrend is not over and the EUR/USD should ultimately reach parity. However, the road will be bumpier from now, and the first serious hiccup seems imminent.
The Riksbank and Norges bank delivered two contrasting surprises. Sweden is facing an acute deflation conundrum while Norway may only need to regulate price pressure. The Riksbank stands out as the Nordic central bank having the strongest currency war inclinations. Revived monetary policy divergence should lift the NOK/SEK again.
The first SNB meeting since the CHF debacle left policy unchanged, but currency strength and deflation raise the possibility of a liquidity trap. The credibility of future commitments and actions (including FX interventions) should be severely challenged, limiting the scope of CHF weakness