9 Mar 2015
Employment strength to alter Fed communication – BTMU
FXStreet (Barcelona) - With US posting an upbeat employment report, Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views that the time has come for a change in Fed’s communication, expecting “patient” to be dropped in the March meeting.
Key Quotes
“The 295k gain in non-farm payrolls has added yet further demand for the US dollar as it become increasingly difficult to assume there will be no change in monetary stance by the Federal Reserve over the coming meetings.”
“We expect the word “patient” to be dropped from the statement on 18th March opening up the potential for a rate increase at the June meeting.”
“Still, if there is a source of concern for the Fed at this stage it must be the speed of dollar gains – the 8.1% gain so far this year is about two-thirds of the gain for the entire year last year and that is likely to alter the Fed’s assumptions on the disinflationary impetus coming from dollar strength.”
“.. Fed’s Major Currency Index is set to advance to a level that will drive non-energy import prices further into negative territory.”
“If there is a delay in timing of the first rate increase it may well be down to the speed of dollar appreciation – that’s certainly what we will be watching closely over the coming weeks.”
“Further dollar gains around the dropping of “patient” on 18th March seems probable.”
Key Quotes
“The 295k gain in non-farm payrolls has added yet further demand for the US dollar as it become increasingly difficult to assume there will be no change in monetary stance by the Federal Reserve over the coming meetings.”
“We expect the word “patient” to be dropped from the statement on 18th March opening up the potential for a rate increase at the June meeting.”
“Still, if there is a source of concern for the Fed at this stage it must be the speed of dollar gains – the 8.1% gain so far this year is about two-thirds of the gain for the entire year last year and that is likely to alter the Fed’s assumptions on the disinflationary impetus coming from dollar strength.”
“.. Fed’s Major Currency Index is set to advance to a level that will drive non-energy import prices further into negative territory.”
“If there is a delay in timing of the first rate increase it may well be down to the speed of dollar appreciation – that’s certainly what we will be watching closely over the coming weeks.”
“Further dollar gains around the dropping of “patient” on 18th March seems probable.”