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12 Mar 2015
Stronger US dollar here to stay despite concerns – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, shares St Louis Fed President Bullard’s view that the stronger USD is here to stay, and that there would be no intervention in the USD’s climb to equilibrate international markets.
Key Quotes
“The US dollar has weakened modestly in the Asian trading session following very strong gains over the last week. The sharp strengthening of the US dollar is drawing more concerns over its potential impact on the US economy and subsequently the outlook for Fed policy.”
“In an interesting interview with the FT today, St Louis Fed President Bullard stated that he could understand some of the “consternation” he was hearing from big US companies regarding the strength of the US dollar, but that such companies hedge their currency exposure.”
“He added that the “bottom line is we have a flexible exchange rate system and that we are trying to run the best monetary policy for the United States that we can”. “We are going to let the exchange rate go where it needs to go to equilibrate international markets”.”
“St Louis Fed President Bullard does not appear overly concerned about the negative impact of the stronger US dollar on the US economy. He expects the recent economic slowdown in Q1 to prove short-lived.”
“He is of the view that the Fed is now overdue in beginning to normalize monetary policy given the rapid pace of improvement in the US labour market believing that the unemployment rate could even be below 5.0% by the autumn. As such he remains worried that the market is underestimating the likely upward path of interest rates in the US which could lead to an abrupt adjustment.”
Key Quotes
“The US dollar has weakened modestly in the Asian trading session following very strong gains over the last week. The sharp strengthening of the US dollar is drawing more concerns over its potential impact on the US economy and subsequently the outlook for Fed policy.”
“In an interesting interview with the FT today, St Louis Fed President Bullard stated that he could understand some of the “consternation” he was hearing from big US companies regarding the strength of the US dollar, but that such companies hedge their currency exposure.”
“He added that the “bottom line is we have a flexible exchange rate system and that we are trying to run the best monetary policy for the United States that we can”. “We are going to let the exchange rate go where it needs to go to equilibrate international markets”.”
“St Louis Fed President Bullard does not appear overly concerned about the negative impact of the stronger US dollar on the US economy. He expects the recent economic slowdown in Q1 to prove short-lived.”
“He is of the view that the Fed is now overdue in beginning to normalize monetary policy given the rapid pace of improvement in the US labour market believing that the unemployment rate could even be below 5.0% by the autumn. As such he remains worried that the market is underestimating the likely upward path of interest rates in the US which could lead to an abrupt adjustment.”