USD: Buy Dips Vs CHF Or Commodity FX - Credit Agricole
FOMC minutes revealed to markets that a June move cannot be ruled out. Though odds of a hike next month have increased in our view, we believe a July hike is still more likely as incoming data will have to confirm better price conditions and as external risk events such as the EU referendum may have to pass.
It must be noted too that there appears to be a disconnect between recent speeches and the April minutes, as FOMC participants (with the exception of Lacker and George) continue to lack conviction on June.
All of the above suggests that near-term rate expectations may remain capped around these levels. Over the longer term, however, at least two rate hikes this year remain the Fed’s baseline scenario compared to market expectations for only one increase.With rates still significantly under-priced, USD will stay a buy on dips, for instance against the CHF or commodity currencies.
