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2 Dec 2014
Will the US dollar rally end? – FXStreet
FXStreet (Barcelona) - FXStreet Analyst and Editor, Omkar Godbole, highlights the correction risk for the USD on probable scenarios of - recovering crude prices, ECB’s u-turn for QE or a fall in US treasury yields.
Key Quotes
“A recovery of 15-17% in crude Prices (to levels seen in Mid-October), will erase the rally in the dollar index that was fuelled by fears of deflation in the advanced economies. Moreover, in such a case, bond yields in the UK, and the Eurozone are likely to rise much faster than those in the US”
“Markets consider sovereign QE as a done deal in the Eurozone. If the ECB fails to deliver, the EUR/USD pair is likely to see a sharp recovery up to 1.28 levels.”
“The US treasury yields have been relatively resilient as markets expect the Federal Reserve to raise interest rates in Q3 of 2015. However, this makes the USD vulnerable against the Yen. Bank of Japan is unlikely to provide more surprises, at least in H1 2015. Moreover, the Japanese markets have ignored the debt rating downgrade by Moody’s. Hence, a fall in the treasury yields is likely to see a sharp correction in the USD/JPY pair towards 112-113 levels”
Key Quotes
“A recovery of 15-17% in crude Prices (to levels seen in Mid-October), will erase the rally in the dollar index that was fuelled by fears of deflation in the advanced economies. Moreover, in such a case, bond yields in the UK, and the Eurozone are likely to rise much faster than those in the US”
“Markets consider sovereign QE as a done deal in the Eurozone. If the ECB fails to deliver, the EUR/USD pair is likely to see a sharp recovery up to 1.28 levels.”
“The US treasury yields have been relatively resilient as markets expect the Federal Reserve to raise interest rates in Q3 of 2015. However, this makes the USD vulnerable against the Yen. Bank of Japan is unlikely to provide more surprises, at least in H1 2015. Moreover, the Japanese markets have ignored the debt rating downgrade by Moody’s. Hence, a fall in the treasury yields is likely to see a sharp correction in the USD/JPY pair towards 112-113 levels”