26 May 2015
USD requires support from fundamentals to enjoy a sustained rebound – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, believes that the recent lower correction in USD was as a result of position adjustment, and the rebound seen now will required support from US data for a sustained upside momentum.
Key Quotes
“The US dollar has continued to rebound in the Asian trading session with the dollar index rising back towards its 55-day moving average at just below the 97.00-level. The US dollar’s sharp rebound over the past week has supported our view that its recent correction lower was exaggerated by short-term position adjustment and not fully justified by relative fundamentals drivers.”
“For renewed US dollar upward momentum to be sustained it will likely require building evidence that the US economy is returning to a more solid pace of growth to support expectations that the Fed will begin to tighten monetary policy later this year.”
“The US dollar derived support late last week from the release of the latest US CPI report which revealed that core inflation pressures have continued to remain firmer than expected so far this year. The report revealed that core inflation increased by 0.26% in April which was the strongest monthly increase since August 2011, and lifted the annualized rate of growth so far this year to around 2.5%. It follows the weak period of core inflation from the second half of last year during which it expanded by an annualized rate of around 1.3%.”
“The recent stronger than expected firming in core inflation is reassuring as the US dollar has continued to strengthen materially, and is likely to make the Fed more comfortable about beginning to tighten monetary policy.”
Key Quotes
“The US dollar has continued to rebound in the Asian trading session with the dollar index rising back towards its 55-day moving average at just below the 97.00-level. The US dollar’s sharp rebound over the past week has supported our view that its recent correction lower was exaggerated by short-term position adjustment and not fully justified by relative fundamentals drivers.”
“For renewed US dollar upward momentum to be sustained it will likely require building evidence that the US economy is returning to a more solid pace of growth to support expectations that the Fed will begin to tighten monetary policy later this year.”
“The US dollar derived support late last week from the release of the latest US CPI report which revealed that core inflation pressures have continued to remain firmer than expected so far this year. The report revealed that core inflation increased by 0.26% in April which was the strongest monthly increase since August 2011, and lifted the annualized rate of growth so far this year to around 2.5%. It follows the weak period of core inflation from the second half of last year during which it expanded by an annualized rate of around 1.3%.”
“The recent stronger than expected firming in core inflation is reassuring as the US dollar has continued to strengthen materially, and is likely to make the Fed more comfortable about beginning to tighten monetary policy.”