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US Dollar to enjoy a post FOMC boost – TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 16, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Ned Rumpeltin, European Head of FX Strategy at TDS, expects the USD to enjoy a post-FOMC boost.

    Key Quotes

    “With the broader uptrend looking increasingly tired; however, our ambition to see major gains is somewhat limited for now. We think the USD is likely to see further gains into the early weeks of next year, but our current forecast profile has it reaching a peak against most G10 currencies at some point in the first few months of 2016. Looking across the range of alternatives, we think current market conditions favour keeping things simple.”

    “Typically, we would prefer expressing a directional view through USDJPY. In this case, however, we think the scope for this pair to rally is minimal beyond current ranges. In addition to our general view that USDJPY may have already topped, we note that spot has become tightly correlated with the Nikkei rather than rate spreads.”

    “As the Fed’s impact on global equity markets is particularly difficult to gauge here, we think EURUSD is actually the better vehicle to express a bullish near-term USD view. We expect EURUSD to drop in the aftermath of this week’s FOMC meeting toward our Q1-16 forecast of 1.03 as its post-ECB rebound has clearly eclipsed levels justified by rate spreads.”

    “Should the Fed underwhelm, however, we think the CAD may benefit disproportionately. In addition to the support spot may receive from an expected bounce in oil prices from a particularly dovish Fed, USDCAD has rallied sharply since the start of December, pointing to underlying positioning risks amid thin liquidity.”
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