18 May 2015
USD to gather pace by year-end – JP Morgan
FXStreet (Edinburgh) - In the opinion of analysts at JP Morgan, the greenback is expected to resume the upside towards end 2015.
Key Quotes
“Since March we have been referring to the USD index as an early-stage bubble, because that seemed the most appropriate description based on valuation, momentum and positioning”.
“Also, the bullish dollar narrative was sounding lopsided since it ignored the feedback loop from a strong USD to a weak economy, lower inflation and delayed rate hikes”.
“After a 4% trade weighted decline since mid-March, we believe about half of the air has been let out of this balloon”.
“Thus, these same indicators suggest that the dollar would fall further if the US economy fails to revive meaningfully and if the Fed confirms that it will not hike rates until 2016”.
“The primary justification for forecasting a higher USD by year end is the belief (hope) that the US economy will step up eventually”.
Key Quotes
“Since March we have been referring to the USD index as an early-stage bubble, because that seemed the most appropriate description based on valuation, momentum and positioning”.
“Also, the bullish dollar narrative was sounding lopsided since it ignored the feedback loop from a strong USD to a weak economy, lower inflation and delayed rate hikes”.
“After a 4% trade weighted decline since mid-March, we believe about half of the air has been let out of this balloon”.
“Thus, these same indicators suggest that the dollar would fall further if the US economy fails to revive meaningfully and if the Fed confirms that it will not hike rates until 2016”.
“The primary justification for forecasting a higher USD by year end is the belief (hope) that the US economy will step up eventually”.