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26 Feb 2015
Fed might deliver two rate hikes by 2015-end, USD remains a buy – TDS
FXStreet (Barcelona) - The TD Securities Team gives the outlook for US rates and USD, expecting Fed to hike rates twice in 2015 starting September, and USD to resume its bullish trend post consolidation.
Key Quotes
“Despite some weakening in business spending activity, the outlook for economic activity remains favourable, bolstered by household spending, which will be underpinned by higher disposable income on account of lower energy prices and income growth.”
“Despite the relatively dovish tone of the January FOMC minutes and Yellen’s recent testimony on Capitol Hill, we believe that the Fed remains on course for policy lift-off this year.”
“Our expectation is for the Fed to begin tightening policy in September, delivering two rate hikes by the end of this year. Given this, we remain bearish on the Treasuries, expecting yields to drift higher into the first rate hike later this year.”
“After the pronounced USD rally through late 2014/early 2015, a period of consolidation (extending perhaps deep into Q1) may be required to work off the USD's broadly "overbought" status.”
“We remain bullish on the USD's overall outlook though and think that short-term corrective weakness in the currency is a buy.”
Key Quotes
“Despite some weakening in business spending activity, the outlook for economic activity remains favourable, bolstered by household spending, which will be underpinned by higher disposable income on account of lower energy prices and income growth.”
“Despite the relatively dovish tone of the January FOMC minutes and Yellen’s recent testimony on Capitol Hill, we believe that the Fed remains on course for policy lift-off this year.”
“Our expectation is for the Fed to begin tightening policy in September, delivering two rate hikes by the end of this year. Given this, we remain bearish on the Treasuries, expecting yields to drift higher into the first rate hike later this year.”
“After the pronounced USD rally through late 2014/early 2015, a period of consolidation (extending perhaps deep into Q1) may be required to work off the USD's broadly "overbought" status.”
“We remain bullish on the USD's overall outlook though and think that short-term corrective weakness in the currency is a buy.”