14 Jul 2014
Market under-pricing risk of tighter Fed - RBS
FXStreet (Bali) - According to RBS FX Strategist Greg Gibbs, the market is under-pricing the risk of policy tightening in the US compared to other major central banks.
Key Quotes
"My views remain largely unchanged – that the market is under-pricing the risk of policy tightening in the US compared to other major central banks, and the USD is looking cheap.. But the catalyst for a shift may require further evidence that the US recovery has increased traction."
"The market has absorbed a view that the key members of the Fed are in no hurry to hike rates; but we wonder if Yellen can continue to cast a spell over the bond market at her testimony on Tuesday. RBA FX transactions data on Thursday take on more significance in light of Governor Stevens' more strident views on the AUD expressed two weeks ago. It is not inconceivable that the RBA acted to cap the AUD as it rose towards .95 in late June."
Key Quotes
"My views remain largely unchanged – that the market is under-pricing the risk of policy tightening in the US compared to other major central banks, and the USD is looking cheap.. But the catalyst for a shift may require further evidence that the US recovery has increased traction."
"The market has absorbed a view that the key members of the Fed are in no hurry to hike rates; but we wonder if Yellen can continue to cast a spell over the bond market at her testimony on Tuesday. RBA FX transactions data on Thursday take on more significance in light of Governor Stevens' more strident views on the AUD expressed two weeks ago. It is not inconceivable that the RBA acted to cap the AUD as it rose towards .95 in late June."