US: Delayed Fed rate hike expectations prompt search for yield - MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the US dollar remains on the defensive in the near-term with renewed weakness most evident against commodity related and emerging market currencies.

Key Quotes

“Delayed Fed rate hike expectations are prompting a search for yield boosting demand for high yielding currencies. Renewed weakness in the US dollar is also supporting further gains in commodity prices. Bloomberg’s commodity price index has extended its rebound from the cyclical lows in January to almost 25% moving back towards levels recorded during the autumn of last year. Positive momentum for commodity-related and emerging market currencies appears unlikely to be disrupted in the near-term with scope for further upside.”