USD gets left behind as risk recovers – BNPP

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 18, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    Economists at BNP Paribas, suggests that despite the improved risk environment, the USD was unable to regain ground vs. the EUR and JPY, consistent with a very limited recovery in US front-end rates.

    Key Quotes

    “With reduced Fed rate hike expectations likely a key factor behind the stabilization and recovery in financial markets this week and the broader USD retreat critical in containing fears of CNY devaluation, it is understandable that Fed expectations and the USD have been unable to recover even as risk appetite improves.

    Moreover, the minutes to the January FOMC meeting showed a Committee very focused on financial conditions which our economists think will lock out the Fed from hiking rates this year and next.

    We continue to anticipate renewed downside in USDJPY and upside in EURUSD towards our recently established 108 and 1.16 targets. Ahead Thursday, we expect the Philadelphia Fed index to remain in negative territory, countering optimism generated by the upside surprise to US January manufacturing data reported Wednesday.”
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