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3 Mar 2015
Fed’s tightening bias keeps supporting the dollar – BTMU
FXStreet (Edinburgh) - Following last week’s testimony by Chairwoman Yellen, Lee Hardman, Currency Analyst at BTMU, sees the greenback strengthening further as markets get closer to the Fed’s first rate hike.
Key Quotes
“Overall, the testimony signals that the Fed is moving closer to raising rates while overseas central banks are still easing monetary policy”.
“As a result the Fed’s monetary policy is tightening on a relative basis. The divergence in monetary policy between the Fed and overseas central banks is likely to widen further still in the year ahead”.
“If the Fed remains track to begin raising rates gradually from the middle of this year as we expect, then it is likely that US dollar weakness following the semiannual testimony will prove short-lived”.
“US dollar strength is likely to resume as short-term US yields adjust higher in anticipation of the first Fed rate hike”.
Key Quotes
“Overall, the testimony signals that the Fed is moving closer to raising rates while overseas central banks are still easing monetary policy”.
“As a result the Fed’s monetary policy is tightening on a relative basis. The divergence in monetary policy between the Fed and overseas central banks is likely to widen further still in the year ahead”.
“If the Fed remains track to begin raising rates gradually from the middle of this year as we expect, then it is likely that US dollar weakness following the semiannual testimony will prove short-lived”.
“US dollar strength is likely to resume as short-term US yields adjust higher in anticipation of the first Fed rate hike”.