7 Apr 2015
USD weakness in the near-term might remain limited – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, explains that recent US ISM and services PMI suggest that the US economic slowdown in US would likely prove temporary, which would limit the near-term USD weakness.
Key Quotes
“We continue to remain optimistic that the recent US economic slowdown is likely to prove temporary although downside risks to that view have increased following the weaker US employment report. New York Fed President Dudley stated yesterday that “overall, I view these downside surprises as reflecting temporary factors to a significant degree”.”
“He emphasized as well that the path of rate increases is likely to be “shallow” with the pace of tightening dependent on incoming economic data and financial market conditions.”
“If financial market conditions do not tighten as much in response to higher short-term rates, he stated that the Fed might have to move more quickly, and vice versa.”
“The latest leading indicators are signalling that the recent economic slowdown is likely to prove temporary. The ISM non-manufacturing survey continued to remain consistent with solid growth easing only modestly to 56.5 in March. The services PMI survey provided an even more favourable signal increasing to a robust reading of 59.2 in March which was the highest level since the summer of last year.”
“If evidence continues to build that the US economy is regaining upward momentum, the scope for further US dollar weakness in the near-term will likely prove limited.”
Key Quotes
“We continue to remain optimistic that the recent US economic slowdown is likely to prove temporary although downside risks to that view have increased following the weaker US employment report. New York Fed President Dudley stated yesterday that “overall, I view these downside surprises as reflecting temporary factors to a significant degree”.”
“He emphasized as well that the path of rate increases is likely to be “shallow” with the pace of tightening dependent on incoming economic data and financial market conditions.”
“If financial market conditions do not tighten as much in response to higher short-term rates, he stated that the Fed might have to move more quickly, and vice versa.”
“The latest leading indicators are signalling that the recent economic slowdown is likely to prove temporary. The ISM non-manufacturing survey continued to remain consistent with solid growth easing only modestly to 56.5 in March. The services PMI survey provided an even more favourable signal increasing to a robust reading of 59.2 in March which was the highest level since the summer of last year.”
“If evidence continues to build that the US economy is regaining upward momentum, the scope for further US dollar weakness in the near-term will likely prove limited.”