27 Sep 2013
Flash: USD strength not to pick up until Q1 2014 - TDS
FXstreet.com (Barcelona) - The postponement of QE tapering is suggestive of yet another delay in the USD strength, one that should not pick up much support until early 2014, according to Greg T. Moore, FX Strategist at TD Securities.
Key Quotes
"Postponed tapering means the USD should find less support in the near term—at least from the perspective of relative central bank balance sheets. But the core fundamental argument for a stronger USD over the long run remains unchanged (US growth outperformance, shrinking current account balance, and strides to improve the fiscal balance)."
"Moreover, the conditions for the Fed to taper are arguably already present, and the debate is over when tapering should begin, not whether it should happen."
"Compared to other regions where the economic recovery is in even earlier stages, and where central banks should remain at least as accommodative as they currently are for an extended period (especially the ECB and BoJ), the US continues to look like a growth leader in the coming years."
"That means we are unlikely to see US yields fall anywhere near as low as they were at the beginning of the year, and the same goes for the USD. We may see more sideways moves in the coming weeks and months, but our long term USD bullish call remains intact."
Key Quotes
"Postponed tapering means the USD should find less support in the near term—at least from the perspective of relative central bank balance sheets. But the core fundamental argument for a stronger USD over the long run remains unchanged (US growth outperformance, shrinking current account balance, and strides to improve the fiscal balance)."
"Moreover, the conditions for the Fed to taper are arguably already present, and the debate is over when tapering should begin, not whether it should happen."
"Compared to other regions where the economic recovery is in even earlier stages, and where central banks should remain at least as accommodative as they currently are for an extended period (especially the ECB and BoJ), the US continues to look like a growth leader in the coming years."
"That means we are unlikely to see US yields fall anywhere near as low as they were at the beginning of the year, and the same goes for the USD. We may see more sideways moves in the coming weeks and months, but our long term USD bullish call remains intact."