26 May 2015
USD bulls marginally with the upper hoof - ANZ
FXStreet (Bali) - As reported by the ANZ Research Team, the USD long-side players remain marginally with the upper hoof, with markets pricing a Sept rate hike at 50% and fully priced by Dec.
Key Quotes
"Few surprises overnight including a ‘state the obvious’ speech from US Federal Reserve Vice Chairman Stanley Fischer, noting that the beginning of the rate hike cycle will be determined by data and not date as they weigh up the risk of raising rates prematurely against playing catch-up later in the piece. The central scenario still points to a September lift-off."
"That leaves the USD bulls marginally with the upper hoof; we say marginally because markets are already largely expecting the same (a Sept move is 50% priced and fully priced by Dec) and you need something additional beyond that to elicit movement."
"In the meantime, the waiting game continues but we look set to enter a heightened period of sensitivity. Higher rates will be a good thing; the challenge is to ensure (or be satisfied) there is enough in the fundamentals to ensure equities don’t freak out as the risk free rate moves up."
Key Quotes
"Few surprises overnight including a ‘state the obvious’ speech from US Federal Reserve Vice Chairman Stanley Fischer, noting that the beginning of the rate hike cycle will be determined by data and not date as they weigh up the risk of raising rates prematurely against playing catch-up later in the piece. The central scenario still points to a September lift-off."
"That leaves the USD bulls marginally with the upper hoof; we say marginally because markets are already largely expecting the same (a Sept move is 50% priced and fully priced by Dec) and you need something additional beyond that to elicit movement."
"In the meantime, the waiting game continues but we look set to enter a heightened period of sensitivity. Higher rates will be a good thing; the challenge is to ensure (or be satisfied) there is enough in the fundamentals to ensure equities don’t freak out as the risk free rate moves up."