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20 Apr 2015
Fed has a tightening bias – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Research Team, cautions against going too bearish on the USD, and explain that the Fed retains a tightening bias.
Key Quotes
“We caution against getting too bearish the US dollar. It is true that the first quarter has disappointed expectations. Again. The economic performance in the first quarters (average 0.6% SAAR growth past five years) is not representative of the other quarters (average 2.8% SAAR growth past five years). The Fed recognizes this and anticipates stronger growth.”
“The Federal Reserve has a tightening bias. It is looking for an opportunity to raise the Fed funds target. That opportunity is understood in terms of data.”
“The Fed's statements indicate that the bar to lift-off is "reasonable confidence" that the mandates will be achieved. Some officials explain this in terms how monetary policy acts with lags.”
“The Fed has to be forward looking. The economic performance in Q1 and a smidgen of April data cannot reasonably impact the Fed's decision in September. The Fed warned that the dollar's strength and the decline in oil prices were transitory headwinds, and they are proving to be so.”
“The decline in oil prices, interest rates, and the euro was widely understood to give the regional economy better traction. And so it has. This week's flash PMI reading is expected to confirm that Q2 has begun with reasonably good momentum. The key determinants of the investment climate EMU are not economic growth per se.”
Key Quotes
“We caution against getting too bearish the US dollar. It is true that the first quarter has disappointed expectations. Again. The economic performance in the first quarters (average 0.6% SAAR growth past five years) is not representative of the other quarters (average 2.8% SAAR growth past five years). The Fed recognizes this and anticipates stronger growth.”
“The Federal Reserve has a tightening bias. It is looking for an opportunity to raise the Fed funds target. That opportunity is understood in terms of data.”
“The Fed's statements indicate that the bar to lift-off is "reasonable confidence" that the mandates will be achieved. Some officials explain this in terms how monetary policy acts with lags.”
“The Fed has to be forward looking. The economic performance in Q1 and a smidgen of April data cannot reasonably impact the Fed's decision in September. The Fed warned that the dollar's strength and the decline in oil prices were transitory headwinds, and they are proving to be so.”
“The decline in oil prices, interest rates, and the euro was widely understood to give the regional economy better traction. And so it has. This week's flash PMI reading is expected to confirm that Q2 has begun with reasonably good momentum. The key determinants of the investment climate EMU are not economic growth per se.”