The Jackson Hole Symposium is awaiting us at the end of the week, and already causing tensions for markets. What can we expect for the US dollar ahead of the big event and moving into September?
Here is their view, courtesy of eFXnews:
BNP Pariabs FX Strategy Research notes that the USD will face a challenging US legislative calendar in September.
“An increase in the Federal debt ceiling must be passed by early October in order to avoid a technical default on US debt…
…Focus on fiscal policy in September is likely to mean less attention will be paid to the monetary policy outlook. The Fed has sent strong signals that it will announce its tapering plans at its 20 September meeting, but it seems likely to leave its policy target rates unchanged at that time,” BNPP argues.
Beyond September, BNPP thinks that the prospects for the USD should look a bit better in Q4.
“By that point, key must-pass legislation should be in the rear-view mirror (even with extensions being only temporary). If Congress also manages to pass a budget resolution for the upcoming fiscal year (non-binding legislation that would provide a procedural framework for passing tax reform with just a simple majority in the Senate), markets would also likely need to increase pricing for a possible tax-reform package passing Congress early next year,” BNPP adds.
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