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5 Jan 2015
USD remains firm on divergence – DBS
FXStreet (Barcelona) - The DBS Group Research Team notes that the US dollar remains firm on monetary divergences in the G3 economies at the start of 2015, further sharing that the rise in the greenback might not be smooth.
Key Quotes
“Cleveland Fed President Loretta Mester said on New Year’s Day that the US could see rate rises start in the first half of the year. Consensus expects the first move to come in mid-2015.”
“The euro, on the other hand, has fallen below 1.20 in anticipation of the European Central Bank (ECB) moving closer towards quantitative easing (QE) measures at its governing council meeting this Thursday. The Bank of Japan (BOJ) has already expanded its quantitative and qualitative easing (QQE) program last October.”
“Like the Japanese yen in December, the euro is also under pressure ahead of a snap election later this month. Euro bears are betting on a win by the leftist opposition party in Greece to roll back austerity measures. This has eclipsed reports that Germany was looking forward to better economic growth this year, and is still against the ECB buying sovereign bonds.”
“USD bulls are also mindful that the rise in the greenback will not be a smooth one. Unlike optimistic US policymakers, US stocks and bonds are cautious about mean reversion, especially after such a strong US GDP report for 4Q14.”
Key Quotes
“Cleveland Fed President Loretta Mester said on New Year’s Day that the US could see rate rises start in the first half of the year. Consensus expects the first move to come in mid-2015.”
“The euro, on the other hand, has fallen below 1.20 in anticipation of the European Central Bank (ECB) moving closer towards quantitative easing (QE) measures at its governing council meeting this Thursday. The Bank of Japan (BOJ) has already expanded its quantitative and qualitative easing (QQE) program last October.”
“Like the Japanese yen in December, the euro is also under pressure ahead of a snap election later this month. Euro bears are betting on a win by the leftist opposition party in Greece to roll back austerity measures. This has eclipsed reports that Germany was looking forward to better economic growth this year, and is still against the ECB buying sovereign bonds.”
“USD bulls are also mindful that the rise in the greenback will not be a smooth one. Unlike optimistic US policymakers, US stocks and bonds are cautious about mean reversion, especially after such a strong US GDP report for 4Q14.”