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22 Jun 2015
Reasons for a stronger dollar – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan exposed their reasoning backing a firmer USD in the upcoming periods.
Key Quotes
“The reasons we still project further USD strength beginning at some point this summer are the following:”
“(1) the labour market should create inflation pressures that the Fed would start responding to probably in September;”
“(2) as the Fed responds, it will still be the only central bank hiking in H2;”
“(3) most vulnerabilities of the non-USD currencies (high valuations, negative real policy rates, current account deficits) persist two years after the taper tantrum; and”
“(4) illiquidity could exaggerate bond and FX moves in an otherwise dull Fed cycle where modest and gradual seem the buzzwords”.
Key Quotes
“The reasons we still project further USD strength beginning at some point this summer are the following:”
“(1) the labour market should create inflation pressures that the Fed would start responding to probably in September;”
“(2) as the Fed responds, it will still be the only central bank hiking in H2;”
“(3) most vulnerabilities of the non-USD currencies (high valuations, negative real policy rates, current account deficits) persist two years after the taper tantrum; and”
“(4) illiquidity could exaggerate bond and FX moves in an otherwise dull Fed cycle where modest and gradual seem the buzzwords”.