20 Mar 2014
USD and Yellen; Mind the gap - HSBC
FXStreet (Guatemala) - Daragh Maher, FX Strategist at HSBC, explained the gap between end of QE and first rate hike is what counts.
Key Quotes:
“Tapering no longer captivates the market. We argued back in January that the key driver to the market would become the expected gap between the end of QE and the first rate hike”.
“Yellen's suggestion last night that this gap might only be 6 months caught the market by surprise and provoked widespread USD buying. Unless the Fed back-tracks in future comments, this should provide further support for the USD”.
“The chart below the expected gap between QE end and the first hike, based on Bloomberg surveys and Fed funds futures for when the policy rate should reach 0.50%. Three phases are worth noting”.
Key Quotes:
“Tapering no longer captivates the market. We argued back in January that the key driver to the market would become the expected gap between the end of QE and the first rate hike”.
“Yellen's suggestion last night that this gap might only be 6 months caught the market by surprise and provoked widespread USD buying. Unless the Fed back-tracks in future comments, this should provide further support for the USD”.
“The chart below the expected gap between QE end and the first hike, based on Bloomberg surveys and Fed funds futures for when the policy rate should reach 0.50%. Three phases are worth noting”.