25 Mar 2015
USD might continue to suffer in the near-term – OCBC
FXStreet (Barcelona) - Emmanuel Ng, FX Strategist at OCBC Bank, explains that the recent Fed rhetoric on USD strength would help keep the Dollar bulls away in the near-term, and hence suggests going long on the anitpodeans, and shorting USD/CAD.
Key Quotes
“While the structural dollar strength story may still remain in play (Fed’s Bullard referring to “sometime in the summer”) over the medium term (with structural players likely to collect on dips), the greenback may continue to suffer blow back in the wake of last week’s FOMC as investors continue to rebalance their positioning.”
“Recent Fed rhetoric has acknowledged the impact of a stronger dollar on US growth we note that it has been cautious in not perpetuating the fear that it would derail policy normalization. Nonetheless, we think that this may prove enough cause for pause in the near term for outright dollar bulls.”
“To this end, we would prefer to favor the cyclical currencies (with respective central banks that are not hobbled by QE) against the USD on a short term horizon. With a Tuesday spot ref of 0.7886, we also look to a tactical long AUD-USD recommendation targeting 0.8180 with a stop placed at 0.7735.”
“Elsewhere, the other cyclical currencies (NZD, CAD) may also retain some near term momentum higher against the USD if the latter continues to stumble on the back of a subsiding threat of an imminent US rate hike. To this end, we looked to a tactical long NZD-USD (spot ref: 0.7656) idea on Tuesday targeting 0.7975 with a stop placed at 0.7495."
“In the same vein, we also engaged in a tactical short USD-CAD (spot ref: 1.2492) idea with a 1.2085 objective and a stop at 1.2700.”
Key Quotes
“While the structural dollar strength story may still remain in play (Fed’s Bullard referring to “sometime in the summer”) over the medium term (with structural players likely to collect on dips), the greenback may continue to suffer blow back in the wake of last week’s FOMC as investors continue to rebalance their positioning.”
“Recent Fed rhetoric has acknowledged the impact of a stronger dollar on US growth we note that it has been cautious in not perpetuating the fear that it would derail policy normalization. Nonetheless, we think that this may prove enough cause for pause in the near term for outright dollar bulls.”
“To this end, we would prefer to favor the cyclical currencies (with respective central banks that are not hobbled by QE) against the USD on a short term horizon. With a Tuesday spot ref of 0.7886, we also look to a tactical long AUD-USD recommendation targeting 0.8180 with a stop placed at 0.7735.”
“Elsewhere, the other cyclical currencies (NZD, CAD) may also retain some near term momentum higher against the USD if the latter continues to stumble on the back of a subsiding threat of an imminent US rate hike. To this end, we looked to a tactical long NZD-USD (spot ref: 0.7656) idea on Tuesday targeting 0.7975 with a stop placed at 0.7495."
“In the same vein, we also engaged in a tactical short USD-CAD (spot ref: 1.2492) idea with a 1.2085 objective and a stop at 1.2700.”