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18 Sep 2013
Flash: Hard to see FOMC catalyst for heavy USD buying - HSBC
FXstreet.com (Barcelona) - The USD faces the Fed taper decision at a potentially difficult time, notes the HSBC FX Team.
Key Quotes
"Our expectation of USD15bn of tapering with a better than 50:50 chance of some additional efforts to push rate expectations lower should keep the USD on the defensive."
"In particular, USD weakness is likely to operate as a flipside to a rush back into some of the value plays within EM FX. However, even if the Fed confines itself to mere tapering, this points to some additional modest USD weakness in the G10 space as currencies extend their grinding gains versus the greenback."
"In fact, it is hard to see which Fed outcome could provide a catalyst for aggressive USD buying. Larry Summer’s withdrawal as a candidate for the next Fed governor has added further to the USD downside momentum."
Key Quotes
"Our expectation of USD15bn of tapering with a better than 50:50 chance of some additional efforts to push rate expectations lower should keep the USD on the defensive."
"In particular, USD weakness is likely to operate as a flipside to a rush back into some of the value plays within EM FX. However, even if the Fed confines itself to mere tapering, this points to some additional modest USD weakness in the G10 space as currencies extend their grinding gains versus the greenback."
"In fact, it is hard to see which Fed outcome could provide a catalyst for aggressive USD buying. Larry Summer’s withdrawal as a candidate for the next Fed governor has added further to the USD downside momentum."