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27 Mar 2015
Key themes in the FX closing space - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted the main themes in the FX space for the day ahead into the close for the week.
Key Quotes:
"In the Middle East the Saudi bombing of Yemen is now a major pan-Arab military operation. Given that Yemen’s Bab El-Mandeb straits are involved, the gateway to the Red Sea and the Suez Canal, markets will be right to pay attention: that backdrop traditionally means higher oil prices, as well as a rush into USD. (Ironically, this Sunni action vs. an Iranian proxy coincides with joint US/Iranian-proxy action vs. ISIS in Iraq, and a possible conclusion to US-Iranian nuclear talks: indeed, note that the Saudis are calling their operation “Decisive Storm”.)"
"The BOE’s Haldane, Carney, and Broadbent all speak, and do the ECB’S Weidmann, the Fed’s Fischer, and German FinMin Schaeuble."
"Data-wise, we see the next estimate of US Q4 GDP, expected slightly higher at 2.4% QoQ annualized – though concern is already now on how low Q1 is going to be (apart from at the Fed, apparently). We also have final March Michigan consumer sentiment, which is seen slightly higher than the surprisingly-weak initial reading."
"However, the highlight will no doubt be Janet Yellen speaking on US monetary policy at a conference titled “The New Normal for Monetary Policy”: this seems a perfect opportunity for Yellen to make clear what that actually means given all the recent Fed flip-flopping. In short, will she strike a dovish tone, over-ruling the hawkishness of the likes of Bullard, et al., or will she join them and say, “The new normal for monetary policy?” On balance, she’s probably going to be middle of the road, suggesting that, yes, US rates will rise eventually, as to do otherwise is for the FOMC itself to say “This is a recovery?”; but she will likely also underline that even when rates do rise there’s no need to hurry."
Key Quotes:
"In the Middle East the Saudi bombing of Yemen is now a major pan-Arab military operation. Given that Yemen’s Bab El-Mandeb straits are involved, the gateway to the Red Sea and the Suez Canal, markets will be right to pay attention: that backdrop traditionally means higher oil prices, as well as a rush into USD. (Ironically, this Sunni action vs. an Iranian proxy coincides with joint US/Iranian-proxy action vs. ISIS in Iraq, and a possible conclusion to US-Iranian nuclear talks: indeed, note that the Saudis are calling their operation “Decisive Storm”.)"
"The BOE’s Haldane, Carney, and Broadbent all speak, and do the ECB’S Weidmann, the Fed’s Fischer, and German FinMin Schaeuble."
"Data-wise, we see the next estimate of US Q4 GDP, expected slightly higher at 2.4% QoQ annualized – though concern is already now on how low Q1 is going to be (apart from at the Fed, apparently). We also have final March Michigan consumer sentiment, which is seen slightly higher than the surprisingly-weak initial reading."
"However, the highlight will no doubt be Janet Yellen speaking on US monetary policy at a conference titled “The New Normal for Monetary Policy”: this seems a perfect opportunity for Yellen to make clear what that actually means given all the recent Fed flip-flopping. In short, will she strike a dovish tone, over-ruling the hawkishness of the likes of Bullard, et al., or will she join them and say, “The new normal for monetary policy?” On balance, she’s probably going to be middle of the road, suggesting that, yes, US rates will rise eventually, as to do otherwise is for the FOMC itself to say “This is a recovery?”; but she will likely also underline that even when rates do rise there’s no need to hurry."