Will FOMC Be A Game Changer For The USD? - Morgan Stanley

Will FOMC Be A Game Changer For The USD? - Morgan Stanley

26 April 2016, 23:37
Vasilii Apostolidi
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Janet Yellen may pay homage to other more hawkish Fed members when formulating the Fed's statement tomorrow, but when it comes to hike or not in the summer it will pay attention to global developments too.

A weakening Asia triggering rising cross border flows and a higher USD may then delay the rate hike into December.

Accordingly a Fed statement leaving the door open for June may allow the USD to rally for a few days, but is not a game changer.

 

For the USD to regain strength for good, local US conditions may have to become so strong that the Fed may have to retreat from its broadened reaction function. This is not the case yet.

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