27 Apr 2015
Further easing overseas could push USD higher – Rabobank
FXStreet (Edinburgh) - In the opinion of Jane Foley, Senior FX Strategist at Rabobank, the greenback will surely benefit from other major central bank’s monetary easing.
Key Quotes
“Stronger than expected Australian Q1 core CPI data has this week downgraded the risk that the RBA are poised to cut rates in April or May”.
“However, in view of the clouds gathering over Chinese growth we expect that the RBA will lower rates again in the coming months”.
“Assistant Governor of the RBNZ McDermott surprised the market this week with the statement that “evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates”.
“On April 14, Norges Bank Governor Olsen candidly stated that “if things go exactly on from March as we saw then, you can foresee a further reduction in May or June. The Norwegian economy has been hard hit by the plunge in oil and softer than expected March CPI inflation data argue in favour of a spring policy move”.
“Weaker than expected CPI data in Sweden may also tip the scale in favour of further Riksbank easing this year. With CPI inflation at just 0.2%y/y, and with the unemployment rate still relatively high from an historical perspective, the Riksbank may be reluctant to consider its fight against the deflation demons as done”.
“With so many central banks still prepared to ease policy this year, we expect the USD’s broad-based uptrend to sustain albeit it at a moderated pace. We maintain our 12 mth EUR/USD forecast of 1.04”.
Key Quotes
“Stronger than expected Australian Q1 core CPI data has this week downgraded the risk that the RBA are poised to cut rates in April or May”.
“However, in view of the clouds gathering over Chinese growth we expect that the RBA will lower rates again in the coming months”.
“Assistant Governor of the RBNZ McDermott surprised the market this week with the statement that “evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates”.
“On April 14, Norges Bank Governor Olsen candidly stated that “if things go exactly on from March as we saw then, you can foresee a further reduction in May or June. The Norwegian economy has been hard hit by the plunge in oil and softer than expected March CPI inflation data argue in favour of a spring policy move”.
“Weaker than expected CPI data in Sweden may also tip the scale in favour of further Riksbank easing this year. With CPI inflation at just 0.2%y/y, and with the unemployment rate still relatively high from an historical perspective, the Riksbank may be reluctant to consider its fight against the deflation demons as done”.
“With so many central banks still prepared to ease policy this year, we expect the USD’s broad-based uptrend to sustain albeit it at a moderated pace. We maintain our 12 mth EUR/USD forecast of 1.04”.