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16 May 2013
Forex Flash: Aside from Yen, USD´s fate dependent on Fed intentions - DBS Group
FXstreet.com (Barcelona) - DBS Group analysts believe that apart from the Japanese yen, the fate of the US dollar also depends on expectations over the Fed’s intentions on asset purchases this year.
They comment that at its last monetary policy meeting on May 1, the Federal Reserve inserted a new line, “to increase or reduce the pace of its purchases” into its FOMC statement. Put simply, they feel that USD tends to be strong when US jobs data surprises on the upside and fan expectations for the Fed to taper asset purchases. On the other hand, they note that USD was soft last month when Fed officials warned that they may have to increase asset purchases if inflation keeps falling “well below” its 2% inflation target. They write, “Tonight, the US will release both CPI inflation and jobless claims data. If both disappoints on the downside,the USD could return some of the past week’s gains.”
They comment that at its last monetary policy meeting on May 1, the Federal Reserve inserted a new line, “to increase or reduce the pace of its purchases” into its FOMC statement. Put simply, they feel that USD tends to be strong when US jobs data surprises on the upside and fan expectations for the Fed to taper asset purchases. On the other hand, they note that USD was soft last month when Fed officials warned that they may have to increase asset purchases if inflation keeps falling “well below” its 2% inflation target. They write, “Tonight, the US will release both CPI inflation and jobless claims data. If both disappoints on the downside,the USD could return some of the past week’s gains.”