6 Apr 2015
USD outlook balanced, near-term term range trade expected – Scotiabank
FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, highlights the recent key factors which has turned the outlook for USD more balanced.
Key Quote
“The outlook for the USD has become far more balanced on the back of several developments in the last month:
Economy—Softer than expected data from the U.S. in the first quarter, raising concerns about the economic outlook from here; accordingly the market will be sensitive to any negative surprises;
The Fed—expectations for the first Fed rate hike and the path of rate hikes from there are more cautious than they were;
International developments—Building momentum from the European economies, which seem to be reaping the benefits of a weak EUR, low interest rates, accommodative monetary policy and low oil prices; as well as more stimulus to support China’s economy;
Sentiment—A shift towards more neutral sentiment, with a declining one sided view of the USD more obvious in consensus FX forecasts as well as week CFTC positioning data;
Technicals—Suggest a period of range trading for the broad USD, likely reflecting a more balanced general outlook.”
“Accordingly for the USD, with a more balanced outlook, the broad trend is likely to be range trading in the near‐term before there is a catalyst strong enough to eventually push the USD higher.”
Key Quote
“The outlook for the USD has become far more balanced on the back of several developments in the last month:
Economy—Softer than expected data from the U.S. in the first quarter, raising concerns about the economic outlook from here; accordingly the market will be sensitive to any negative surprises;
The Fed—expectations for the first Fed rate hike and the path of rate hikes from there are more cautious than they were;
International developments—Building momentum from the European economies, which seem to be reaping the benefits of a weak EUR, low interest rates, accommodative monetary policy and low oil prices; as well as more stimulus to support China’s economy;
Sentiment—A shift towards more neutral sentiment, with a declining one sided view of the USD more obvious in consensus FX forecasts as well as week CFTC positioning data;
Technicals—Suggest a period of range trading for the broad USD, likely reflecting a more balanced general outlook.”
“Accordingly for the USD, with a more balanced outlook, the broad trend is likely to be range trading in the near‐term before there is a catalyst strong enough to eventually push the USD higher.”