16 Feb 2016
USD stalls as Fed on hold - BNPP
Research Team at BNP Paribas, believes that it is premature to signal “all clear” for financial markets and expect the USD to remain under pressure versus the G10 funding currencies.
Key Quotes
“To the extent risk sentiment can extend its recovery, this will likely be at least partly a function of the shift in market expectations away from further Fed tightening, limiting the degree to which the USD can benefit.
Our economics team no longer expect the Fed to hike rates this year or next and we expect a combination of steady Fed policy and volatile market conditions to push the USD weaker vs. funding currencies and forecast EURUSD reaching 1.16 and USDJPY at 108 by mid-year.
Ahead this week, we expect US January industrial production to have expanded for the first time since August 2015, while base effects should push the January y/y CPI headline to its highest pace since late 2014. However, the risk environment will continue to dominate data in terms of market impact.”
Key Quotes
“To the extent risk sentiment can extend its recovery, this will likely be at least partly a function of the shift in market expectations away from further Fed tightening, limiting the degree to which the USD can benefit.
Our economics team no longer expect the Fed to hike rates this year or next and we expect a combination of steady Fed policy and volatile market conditions to push the USD weaker vs. funding currencies and forecast EURUSD reaching 1.16 and USDJPY at 108 by mid-year.
Ahead this week, we expect US January industrial production to have expanded for the first time since August 2015, while base effects should push the January y/y CPI headline to its highest pace since late 2014. However, the risk environment will continue to dominate data in terms of market impact.”