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11 Feb 2014
Flash: USD downside likely to be limited - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, expects J.Yellen's testimony to have a modest impact on the greenback.
Key Quotes
"The US dollar has continued to weaken modestly in the Asian trading session ahead of the testimony today from new Fed Chair Yellen to the House. Chair Yellen will deliver the semi-annual monetary policy report in which the Fed will update the House upon both the latest developments and its outlook for the US economy and monetary policy."
"Her written testimony will be released in advance of the testimony to the House which will be followed by a Q&A session. US dollar weakness ahead of Fed Chair Yellen’s testimony reflects investor expectations that a more dovish outlook maybe presented."
"Fed Chair Yellen may comment upon recent evidence that the US economy has lost some upward momentum in early 2014 and recent negative developments in emerging markets. With the unemployment rate having fallen even closer to 6.5% in January, the market will also be alert for any potential signal over the future direction for forward guidance."
"The Fed only strengthened its forward guidance in December by stating that it does not intend to raise its key policy rate until the unemployment rate declines “well past” 6.5%. We still expect Fed Chair Yellen to signal that the Fed will continue to wind down QE which is on track to end later this year."
"The Fed’s latest forecasts signalled that the first rate hike is then not expected until in 2015 highlighting that the normalization of monetary policy will remain a gradual process. Absent any significant dovish surprises, the scope for further US dollar weakness following today’s testimony appears modest."
Key Quotes
"The US dollar has continued to weaken modestly in the Asian trading session ahead of the testimony today from new Fed Chair Yellen to the House. Chair Yellen will deliver the semi-annual monetary policy report in which the Fed will update the House upon both the latest developments and its outlook for the US economy and monetary policy."
"Her written testimony will be released in advance of the testimony to the House which will be followed by a Q&A session. US dollar weakness ahead of Fed Chair Yellen’s testimony reflects investor expectations that a more dovish outlook maybe presented."
"Fed Chair Yellen may comment upon recent evidence that the US economy has lost some upward momentum in early 2014 and recent negative developments in emerging markets. With the unemployment rate having fallen even closer to 6.5% in January, the market will also be alert for any potential signal over the future direction for forward guidance."
"The Fed only strengthened its forward guidance in December by stating that it does not intend to raise its key policy rate until the unemployment rate declines “well past” 6.5%. We still expect Fed Chair Yellen to signal that the Fed will continue to wind down QE which is on track to end later this year."
"The Fed’s latest forecasts signalled that the first rate hike is then not expected until in 2015 highlighting that the normalization of monetary policy will remain a gradual process. Absent any significant dovish surprises, the scope for further US dollar weakness following today’s testimony appears modest."