25 Sep 2013
Flash: USD, a safe-haven from USD budget fears? - Rabobank
FXstreet.com (London) - Jane Foley, strategist at Rabobank notes the concerns over the budget from the US and implications on the dollar.
Key Quotes:
“There is a hope in the market that US lawmakers will reach an eleventh hour budget deal much like they did back in summer 2011”.
“the threat that the US government could be shutdown has not yet been fully digested by the markets”.
“Any shutdown of the government this autumn would intensify this pressure on economic activity and could provide a fresh reason for the Fed to delay any tapering of QE. This combination is clearly USD negative and should therefore be sufficient to offset an increase in safe haven demand for the currency”.
“In recent sessions the greenback has benefited from the perception that tapering has merely been delayed and is still on its way. However, until US economic data strengthens we don not expect the USD to achieve real upside momentum. Instead it is likely that in the weeks ahead the USD index will repeat the directional tone exhibited in July 2011”.
Key Quotes:
“There is a hope in the market that US lawmakers will reach an eleventh hour budget deal much like they did back in summer 2011”.
“the threat that the US government could be shutdown has not yet been fully digested by the markets”.
“Any shutdown of the government this autumn would intensify this pressure on economic activity and could provide a fresh reason for the Fed to delay any tapering of QE. This combination is clearly USD negative and should therefore be sufficient to offset an increase in safe haven demand for the currency”.
“In recent sessions the greenback has benefited from the perception that tapering has merely been delayed and is still on its way. However, until US economic data strengthens we don not expect the USD to achieve real upside momentum. Instead it is likely that in the weeks ahead the USD index will repeat the directional tone exhibited in July 2011”.