10 Jul 2015
USD and GBP favoured versus G10 – Rabobank
FXStreet (Barcelona) - With Fed and BoE being the only two central banks in the world who are unlikely to cut their policy rates, Jane Foley, Senior Currency Strategist at Rabobank, bets on USD and GBP vs other G10 FX in the coming months.
Key Quotes
“The events in China and commodities have been pushed out of centre stage in recent sessions by the dramatic events in Greece. The uncertainties regarding a potential Grexit and the associated question marks over the coherence of EMU undoubtedly has the potential to slow investment and growth in the Eurozone and its trading partners. Last week the Riksbank cited Greek risks as a factor in its decision to cut interest rates. This week BoE Governor Carney met with the UK PM and Chancellor to discuss Greece. Despite hawkish comments from MPC member Weale last month, we continue to see steady rates from the BoE until May 2016 with Greek concerns another headwind to UK growth. Similarly we would argue that our forecast that the Fed will choose December over September to hike interest rates has been strengthened by the events of recent weeks.”
“Lower for longer interest rate policy is associated with softer currencies and have bearish views on the AUD, NZD and CAD. It remains the case that the Fed and the BoE are still the two G10 central banks least likely to cut rates again this cycle. Consequently we continue to favour the USD and GBP vs. the rest of G10 in the coming months.”
Key Quotes
“The events in China and commodities have been pushed out of centre stage in recent sessions by the dramatic events in Greece. The uncertainties regarding a potential Grexit and the associated question marks over the coherence of EMU undoubtedly has the potential to slow investment and growth in the Eurozone and its trading partners. Last week the Riksbank cited Greek risks as a factor in its decision to cut interest rates. This week BoE Governor Carney met with the UK PM and Chancellor to discuss Greece. Despite hawkish comments from MPC member Weale last month, we continue to see steady rates from the BoE until May 2016 with Greek concerns another headwind to UK growth. Similarly we would argue that our forecast that the Fed will choose December over September to hike interest rates has been strengthened by the events of recent weeks.”
“Lower for longer interest rate policy is associated with softer currencies and have bearish views on the AUD, NZD and CAD. It remains the case that the Fed and the BoE are still the two G10 central banks least likely to cut rates again this cycle. Consequently we continue to favour the USD and GBP vs. the rest of G10 in the coming months.”