FXStreet (Barcelona) – Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that the recent Greece related developments are pushing Fed rate hike expectations back until year-end.
Key Quotes
“The latest developments regarding Greece and potential for a negative shock if Greece defaults and leaves the euro-zone is prompting the market to push back Fed rate hike expectations until year-end.”
“The Fed is expected to remain cautious when considering to raise rates for the first time since 2006. The drop back in US rates is providing a partial offset to support for the US dollar from negative developments overseas.”
“The US dollar still appears well placed to perform well even if the Fed delays raising rates until the end of this year given the relative performance of the US economy which will be less impacted by any negative spillovers from Greece.”
“The US economy has returned to more solid growth in Q2 although does not appear to be accelerating further in the near-term. The ISM non-manufacturing survey in June was in line with its average over the last two years. The sharper drop in the employment-sub-component has prompted some concern although it could prove temporary.”
(Market News Provided by FXstreet)