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28 Mar 2014
The US dollar looks set to be lifted more appreciably - Societe Generale
FXStreet (Bali) - Sebastien Galy, Senior FX Strategist at Societe Generale, shares his thoughts on the current USD stance, saying the currency is well positioned fundamentally to appreciate this year.
Key Quotes
"The Fed has won the battle but not the war on policy guidance. Range-bound US interest rates have depressed market volatility and held the US dollar back, especially against other G10."
"US Treasuries are pricing in nominal growth over the long term of under 4% in a less debt-fuelled growth environment. The trigger for higher US rates and the dollar will come from the market becoming more sensitive to Fed tightening expectations."
"That sensitivity will naturally rise as Fed asset purchases continue to taper off into year-end. A stronger-than-expected US economic recovery will also spur Fed tightening expectations higher."
"The tensions between cheap Fed guidance talk versus market positioning will then tell. It will lift the US dollar more appreciably, and likely uncover new vulnerabilities in EM."
Key Quotes
"The Fed has won the battle but not the war on policy guidance. Range-bound US interest rates have depressed market volatility and held the US dollar back, especially against other G10."
"US Treasuries are pricing in nominal growth over the long term of under 4% in a less debt-fuelled growth environment. The trigger for higher US rates and the dollar will come from the market becoming more sensitive to Fed tightening expectations."
"That sensitivity will naturally rise as Fed asset purchases continue to taper off into year-end. A stronger-than-expected US economic recovery will also spur Fed tightening expectations higher."
"The tensions between cheap Fed guidance talk versus market positioning will then tell. It will lift the US dollar more appreciably, and likely uncover new vulnerabilities in EM."