4 Jul 2013
Flash: Fed to tip its hand by summers end? – RBS
FXstreet.com (New York) - Last week saw a gaggle of Fed speakers set out to soothe market worries about the timing and pace of any potential policy tapering, notes the FX Strategist Team at RBS.
At the same time, the week’s data weren’t strong enough to see the US yield curve detach by pushing 2y rates through 0.40%. While some of the high frequency data were strong, most noticeably relating to the housing market, a soft Q1 GDP suggested that the Fed is going to struggle to hit its growth target. “While the market seems unlikely to race back, this may be a time when the USD struggles a little more than it has done of late. We may also see a little more bottom fishing in high beta currencies and hence a partial retracement of recent FX moves.” the team adds.
At the same time, the week’s data weren’t strong enough to see the US yield curve detach by pushing 2y rates through 0.40%. While some of the high frequency data were strong, most noticeably relating to the housing market, a soft Q1 GDP suggested that the Fed is going to struggle to hit its growth target. “While the market seems unlikely to race back, this may be a time when the USD struggles a little more than it has done of late. We may also see a little more bottom fishing in high beta currencies and hence a partial retracement of recent FX moves.” the team adds.