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24 Mar 2016
USD constrained by a dovish Fed and weak growth - TDS
Analysts from TDS noted the USD is constrained by a dovish Fed and lacklustre growth but they expect to see selective gains against G-10 counterparts later this year.
Key Quotes:
“A dovish Fed keeps the USD on its back foot a s market focus remains on idiosyncratic risks elsewhere. A return of better growth prospects will put the focus back on (moderate) USD strength as the Fed comes back in play later this year.”
Following a stumble a t the end of 2015, growth momentum has regained its footing. Despite the improvement in growth, however, global headwinds have continued to restrain the Fed, which delivered a dovish message at the March FOMC meeting, forcing the market's pricing for a June rate hike to decline to 50%.
“The dovish March FOMC caught many investors by surprise, but strong data could leave the Fed on track for a June rate hike. While the Fed's dovish tone may keep the curve steeper in the near-term, the gravitational tug from low global yields should continue to support the long end.”
Key Quotes:
“A dovish Fed keeps the USD on its back foot a s market focus remains on idiosyncratic risks elsewhere. A return of better growth prospects will put the focus back on (moderate) USD strength as the Fed comes back in play later this year.”
Following a stumble a t the end of 2015, growth momentum has regained its footing. Despite the improvement in growth, however, global headwinds have continued to restrain the Fed, which delivered a dovish message at the March FOMC meeting, forcing the market's pricing for a June rate hike to decline to 50%.
“The dovish March FOMC caught many investors by surprise, but strong data could leave the Fed on track for a June rate hike. While the Fed's dovish tone may keep the curve steeper in the near-term, the gravitational tug from low global yields should continue to support the long end.”