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18 Mar 2014
Flash: FOMC expected to continue tapering - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, expects the FOMC to announce further QE tapering in tomorrow's meeting.
Key Quotes
"The FOMC will tinker with forward guidance at tomorrow's FOMC meeting, but do nothing on rates. They are heartened by the low rate of inflation, though after the jump in wage growth in February, the US is now enjoying very respectable real wage increases (on average) and the chances of better economic data in the months ahead are improving."
"A Taylor rule estimate of where Fed Funds ‘should' be is at 1.4% currently, and only noteworthy because there is such a clear difference between the strong dollar period in 1996-2000 (when Fed rates were higher than a Taylor rule estimate) and now. Purely for entertainment I have plotted an ECB Taylor rule as they should be at -1.5%."
"In case I wondered why the Euro is so stubbornly strong! If I put those numbers into a EUR/USD baby model EUR/USD ‘should' be at 1.05 but that's just a fantasy. Go on selling Tresuries vs Bunds opr OATs, and let EUR/USD squeeze the range-payers out."
Key Quotes
"The FOMC will tinker with forward guidance at tomorrow's FOMC meeting, but do nothing on rates. They are heartened by the low rate of inflation, though after the jump in wage growth in February, the US is now enjoying very respectable real wage increases (on average) and the chances of better economic data in the months ahead are improving."
"A Taylor rule estimate of where Fed Funds ‘should' be is at 1.4% currently, and only noteworthy because there is such a clear difference between the strong dollar period in 1996-2000 (when Fed rates were higher than a Taylor rule estimate) and now. Purely for entertainment I have plotted an ECB Taylor rule as they should be at -1.5%."
"In case I wondered why the Euro is so stubbornly strong! If I put those numbers into a EUR/USD baby model EUR/USD ‘should' be at 1.05 but that's just a fantasy. Go on selling Tresuries vs Bunds opr OATs, and let EUR/USD squeeze the range-payers out."