29 Mar 2016
US really ready for hike as markets confused and Yellen speaks today – Investec
Research Team at Investec, notes that over the Easter Bank Holiday weekend, the US Dollar stumbled after what had been several sessions of strength on increasing rate hike optimism.
Key Quotes
“Yesterday we saw US personal spending barely increase in February, with the Fed's inflation targeting measure (core PCE) softer than expected. This offset a report from Friday that showed the US economy grew faster than previously reported on the final reading of 2015 Q4 GDP. The data injected another layer of uncertainty into the outlook for US monetary policy, after a dovish FOMC meeting this month was countered by Federal Reserve officials last week opening the door to interest rates being hiked again as soon as the economic data warrants.
With the softer Dollar leading the way, this has helped the Pound and the Euro regroup after last week's losses against the greenback. Commodity linked currencies have also made some gains against the US Dollar, although to a lesser extent, with US Crude oil slipping towards $39 a barrel after a few days of losses. Stock markets were flat in the US and softer in Asia, likely confused by the mixed messages from both US data and the Fed.
As we enter the final week of the month, quarter, and in some circles financial year - currency moves will more likely be flow driven than data driven this week. That said, we do have Federal Reserve Chair Janet Yellen speaking later today at 16:30, and a run of economic data this week culminating in the US Jobs report and Non-farm payroll releases on Friday.”
Key Quotes
“Yesterday we saw US personal spending barely increase in February, with the Fed's inflation targeting measure (core PCE) softer than expected. This offset a report from Friday that showed the US economy grew faster than previously reported on the final reading of 2015 Q4 GDP. The data injected another layer of uncertainty into the outlook for US monetary policy, after a dovish FOMC meeting this month was countered by Federal Reserve officials last week opening the door to interest rates being hiked again as soon as the economic data warrants.
With the softer Dollar leading the way, this has helped the Pound and the Euro regroup after last week's losses against the greenback. Commodity linked currencies have also made some gains against the US Dollar, although to a lesser extent, with US Crude oil slipping towards $39 a barrel after a few days of losses. Stock markets were flat in the US and softer in Asia, likely confused by the mixed messages from both US data and the Fed.
As we enter the final week of the month, quarter, and in some circles financial year - currency moves will more likely be flow driven than data driven this week. That said, we do have Federal Reserve Chair Janet Yellen speaking later today at 16:30, and a run of economic data this week culminating in the US Jobs report and Non-farm payroll releases on Friday.”