As the all important Fed decision is getting closer, here is a view on the hours leading to the event.
The dollar remains left, right and center. Here is the view from Credit Agricole:
Here is their view, courtesy of eFXnews:
The USD has been well supported ahead of tomorrow’s Fed monetary policy announcement.
This is mainly on the back of yesterday’s retail sales release. Although the headline reading fell short of expectations, upward revisions confirm improved domestic demand conditions. This in turn is taken as an indication of rising domestically driven upside risks to inflation. Overall constructive domestic conditions suggest support the Fed’ view of low inflation being transitory and that should keep investors’ Fed monetary policy expectations well supported.
As such we do not expect today’s CPI release to cause any major USD downside risk.Nevertheless, our economists remain of the view that weak inflation expectations and increased downside risks to growth as related to Asia favour an unchanged monetary policy stance this week.
Even if so, Fed Chairwoman Yellen should consider a more hawkish rhetoric during the press conference in order to prepare the market for higher rates in October.
Under such conditions the greenback should stay a buy on dips, for instance against the CHF and JPY.
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