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USD likely to gain against easing banks FX - Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 12, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) - Sean Callow, Research Analyst at Westpac, suggests that the follow-up commentary from Fed officials also indicated that the bar to a rate hike has been raised high in terms of the global economy.

    Key Quotes

    “At the same time as the ECB and Bank of England are tilting to the dovish side, worrying mostly about emerging markets such as China, the Fed is sounding less worried.”

    “Boston Fed president Rosengren generally leans dovish so we would expect caution from him re the global outlook. Instead, he pointed to resilient consumer spending in Q3 as evidence that the Aug-Sep volatility in emerging markets will not cause enough “collateral damage” to warrant further procrastination on a rate hike. So the US dollar’s up trend has been reinforced by the Fed outlook.”

    “Markets are likely to prefer to play for further USD gains mostly against currencies whose central banks are either planning further monetary easing or maintaining very loose policy. Most obvious are EUR, CHF and JPY. The ECB continues to plan new policy options for 3 Dec, with Draghi’s track record suggesting he is unlikely to disappoint expectations.”

    “The BoJ probably won’t alter policy any time soon but its current pace of QE is already aggressive, equating to $54bn per month. This should keep Japanese bond investors looking abroad for higher yields, chipping away at the yen. Likewise the SNB’s steady hand means firmly negative short term interest rates and a willingness to intervene to weaken CHF.”
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