29 Apr 2015
Credit Agricole: FOMC meeting: USD to gain ground against JPY and CHF – eFXnews
FXStreet (Barcelona) - The Strategy Team at Credit Agricole expects Fed to note the recent Q1 weakness in US data as transitory, which will lead USD to register gains mainly against the JPY and CHF, as noted by eFXnews.
Key Quotes
“There should be no policy shift in April and the statement should remain little changed from its March edition. That said, Fed funds futures are now pricing in lift-off only in Dec 15/ Jan 16, increasing the risk that the Fed could disappoint overly dovish market expectations. Key for the markets will be Fed’s updated assessment of the economy.”
“Since the March meeting, the US real economic data releases - NFP, household spending and business investment – have all disappointed. At the same time, core CPI has accelerated further and some long-term inflation expectations measures have stabilized.”
“Indications today that the FOMC members still perceive the recent economic weakness as transitory and are encouraged by the latest developments in (core) inflation should be seen as a small USD-positive surprise.”
“That said, we doubt that the updated outlook will trigger aggressive reprising of Fed tightening risks. As a result, we think that market risk sentiment should remain generally resilient and USD should regain ground mainly against low-yielders like JPY and CHF.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“There should be no policy shift in April and the statement should remain little changed from its March edition. That said, Fed funds futures are now pricing in lift-off only in Dec 15/ Jan 16, increasing the risk that the Fed could disappoint overly dovish market expectations. Key for the markets will be Fed’s updated assessment of the economy.”
“Since the March meeting, the US real economic data releases - NFP, household spending and business investment – have all disappointed. At the same time, core CPI has accelerated further and some long-term inflation expectations measures have stabilized.”
“Indications today that the FOMC members still perceive the recent economic weakness as transitory and are encouraged by the latest developments in (core) inflation should be seen as a small USD-positive surprise.”
“That said, we doubt that the updated outlook will trigger aggressive reprising of Fed tightening risks. As a result, we think that market risk sentiment should remain generally resilient and USD should regain ground mainly against low-yielders like JPY and CHF.”
This content has been provided under specific arrangement with eFXnews.