FXStreet (Edinburgh) – Analysts at JP Morgan exposed their reasoning backing a firmer USD in the upcoming periods.
Key Quotes
“The reasons we still project further USD strength beginning at some point this summer are the following:”
“(1) the labour market should create inflation pressures that the Fed would start responding to probably in September;”
“(2) as the Fed responds, it will still be the only central bank hiking in H2;”
“(3) most vulnerabilities of the non-USD currencies (high valuations, negative real policy rates, current account deficits) persist two years after the taper tantrum; and”
“(4) illiquidity could exaggerate bond and FX moves in an otherwise dull Fed cycle where modest and gradual seem the buzzwords”.
(Market News Provided by FXstreet)