7 Jan 2015
USD may see correction after Fed minutes – FXStreet
FXStreet (Barcelona) - Omkar Godbole, FXStreet Analyst and Editor, believes that today’s Fed minutes might surprise the markets by highlighting the deflationary impacts of the strengthening USD and impact of weakening oil, which may lead to a USD correction.
Key Quotes
“The December Federal Reserve minutes are due for release today. The policy statement released on Dec. 17th included new economic projections, a fresh “dot point” Fed Funds rate projection table, and a press conference by Chair Yellen. Thus, most of the information is already available and priced-in as well by the markets.”
“More importantly, the Fed chairman Yellen in her press conference stated, “a possibility if a sooner-than-expected interest rate hike in the US if the economy continues to recover rapidly”.”
“The Hawkish statement of Dec 17th has pushed the USD index up more than 3% till date. Meanwhile, the US 10-yr treasury yields have declined from 2.3% to the current rate of 1.97% during the same period.”
“Surprises in the minutes, if any, are likely to come-in the form of the policy makers view on the deflationary impact of the strengthening US dollar and the impact of falling energy prices.”
“Given this, there is a high probability of the US dollar witnessing correction post the release of the Fed minutes.”
Key Quotes
“The December Federal Reserve minutes are due for release today. The policy statement released on Dec. 17th included new economic projections, a fresh “dot point” Fed Funds rate projection table, and a press conference by Chair Yellen. Thus, most of the information is already available and priced-in as well by the markets.”
“More importantly, the Fed chairman Yellen in her press conference stated, “a possibility if a sooner-than-expected interest rate hike in the US if the economy continues to recover rapidly”.”
“The Hawkish statement of Dec 17th has pushed the USD index up more than 3% till date. Meanwhile, the US 10-yr treasury yields have declined from 2.3% to the current rate of 1.97% during the same period.”
“Surprises in the minutes, if any, are likely to come-in the form of the policy makers view on the deflationary impact of the strengthening US dollar and the impact of falling energy prices.”
“Given this, there is a high probability of the US dollar witnessing correction post the release of the Fed minutes.”