9 Jul 2014
Environment to remain carry-trade friendly - RBS
FXStreet (Bali) - Following an uneventful FOMC minutes, Strategists at RBS, note that the environment remains supportive of positive carry positions against the USD.
Key Quotes
"The FOMC releases meeting minutes for the June meeting. The Fed (and Chair Yellen in her press conference) made no changes to the key language on the Fed funds rate in June, and that lack of meaningful change in outlook should be reflected in the broad conclusion of these minutes."
"However, the FOMC “dot point” projections hinted at a broad shift to a slightly more hawkish FOMC (i.e. it appears most members saw reason to modestly revise up their projections for the Fed Funds rate)."
"That slight hawkish change may show up in the nuances of the debate over appropriate policy. Unless, and perhaps until, the Chair and the dovish leadership take a hawkish turn, the environment remains supportive of positive carry positions against the USD. Still, we favour taking a defensive stance on those carry positions into key FOMC events, starting with the FOMC minutes."
Key Quotes
"The FOMC releases meeting minutes for the June meeting. The Fed (and Chair Yellen in her press conference) made no changes to the key language on the Fed funds rate in June, and that lack of meaningful change in outlook should be reflected in the broad conclusion of these minutes."
"However, the FOMC “dot point” projections hinted at a broad shift to a slightly more hawkish FOMC (i.e. it appears most members saw reason to modestly revise up their projections for the Fed Funds rate)."
"That slight hawkish change may show up in the nuances of the debate over appropriate policy. Unless, and perhaps until, the Chair and the dovish leadership take a hawkish turn, the environment remains supportive of positive carry positions against the USD. Still, we favour taking a defensive stance on those carry positions into key FOMC events, starting with the FOMC minutes."