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25 Feb 2015
FX in a limbo post Yellen, EUR/USD to remain between 1.1250-1.1450 – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, views that with Yellen’s speech indicating that tightening in US remains some way off FX markets were lift in a limbo, and with majors expected to consolidate, EUR/USD might remain in the 1.1250-1.1450 range awaiting fresh ‘news’.
Key Quotes
“Fed Chair Yellen stuck to the cautious script yesterday, doing a lot of the spade work to prepare the markets for an eventual rate rise but indicating that a tightening in monetary policy remains some way off.”
“Yellen noted that a change in language will be a precursor to a shift in rates, so markets will be scanning the forthcoming (and, in particular, March) FOMC statements for the Fed dropping the word “patience” which might tip the Fed’s hand that a hike is becoming more likely.”
“A June hike still looks a little too early from our perspective but rate increases are still getting closer (we think lift off occurs in September).”
“For now though, the FX markets are left in limbo and vols are collapsing (EURUSD 1m ATMs have given back half of the H2 2014 rally since peaking in January).”
“A lot of bad news is priced into the EUR and good news priced into the USD at these levels and without “new” news to drive the markets, we think the recent consolidation in the major currencies will extend a little longer, keeping EURUSD looks trading between 1.1250/1.1450.”
Key Quotes
“Fed Chair Yellen stuck to the cautious script yesterday, doing a lot of the spade work to prepare the markets for an eventual rate rise but indicating that a tightening in monetary policy remains some way off.”
“Yellen noted that a change in language will be a precursor to a shift in rates, so markets will be scanning the forthcoming (and, in particular, March) FOMC statements for the Fed dropping the word “patience” which might tip the Fed’s hand that a hike is becoming more likely.”
“A June hike still looks a little too early from our perspective but rate increases are still getting closer (we think lift off occurs in September).”
“For now though, the FX markets are left in limbo and vols are collapsing (EURUSD 1m ATMs have given back half of the H2 2014 rally since peaking in January).”
“A lot of bad news is priced into the EUR and good news priced into the USD at these levels and without “new” news to drive the markets, we think the recent consolidation in the major currencies will extend a little longer, keeping EURUSD looks trading between 1.1250/1.1450.”