9 Mar 2015
USD weakness to remain shallow and short-lived – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, comments that the strong employment report has only boosted the bullish outlook for USD, with USD gains versus EUR and JPY favoured at the current juncture.
Key Quotes
“Strong NFP data Friday is clearly forcing the markets to take on more fully the risk that the Fed will, as we have long suspected, start raising rates later this year. Sharp gains in US yields suggest that market expectations have not fully adjusted to this reality.”
“The Fed is very likely to adjust its communication strategy in March and dropping “patience” from its statement will—as Fed officials have been warning fairly consistently—mean that rates could conceivably rise as soon as June.”
“We still rather think September is the likely time for rate lift off but advancing rate expectations will be USD-supportive, particularly against G-10 currencies where central banks are in easing mode. Other markets (commodities, EM) that have done well under ultra-loose monetary conditions are also liable to suffer further adjustments amid tighter USD liquidity.”
“We continue to favour USD gains versus the EUR and the JPY notably at this point.”
“Ironically, the start of the ECB’s QE programme this morning in Europe seems to have coincided with a minor bounce in the EUR but, from a technical point of view, we think the USD bull story remains very strong—both against the EUR and JPY.”
“Look to fade short term USD dips against both—whilst recognizing that USD weakness is liable to remain shallow and short-lived in this environment.”
“Look for EURUSD gains to slow and reverse from the low 1.10 area.“
Key Quotes
“Strong NFP data Friday is clearly forcing the markets to take on more fully the risk that the Fed will, as we have long suspected, start raising rates later this year. Sharp gains in US yields suggest that market expectations have not fully adjusted to this reality.”
“The Fed is very likely to adjust its communication strategy in March and dropping “patience” from its statement will—as Fed officials have been warning fairly consistently—mean that rates could conceivably rise as soon as June.”
“We still rather think September is the likely time for rate lift off but advancing rate expectations will be USD-supportive, particularly against G-10 currencies where central banks are in easing mode. Other markets (commodities, EM) that have done well under ultra-loose monetary conditions are also liable to suffer further adjustments amid tighter USD liquidity.”
“We continue to favour USD gains versus the EUR and the JPY notably at this point.”
“Ironically, the start of the ECB’s QE programme this morning in Europe seems to have coincided with a minor bounce in the EUR but, from a technical point of view, we think the USD bull story remains very strong—both against the EUR and JPY.”
“Look to fade short term USD dips against both—whilst recognizing that USD weakness is liable to remain shallow and short-lived in this environment.”
“Look for EURUSD gains to slow and reverse from the low 1.10 area.“