The FOMC minutes dealt a blow to the US dollar. Can this continue on?
The team at Credit Suisse discusses going bullish on other major currencies:
Here is their view, courtesy of eFXnews:
Credit Suisse remains reluctant to become constructive on non-USD, non-commodity G10 currencies like EUR and JPY.
The main reason behind this view, according to CS, is the still-high risk that the ECB and BoJ themselves may have to re-enter the easing fray down the line.
“For example, as Exhibit 2 shows, European inflation breakevens have also been falling recently. With the ECB’s credibility is on the line as it proceeds with its QE program, it is hard to imagine it standing pat for long and allowing sustained EUR strength to provide a fresh reason for these indicators to push still lower,” CS clarifies.
“Similarly, with the BoJ having promised a sharp rise in inflation in Japan from Q4 2015 onwards, the odds of a downside miss must be rising given sinking oil prices and Japan’s large imports weighting towards China (more on this in the TWI article below),” CS adds.
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