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USD: Outlook data dependent, NFP key this week - RBS
FXStreet (Bali) - The outlook for the USD, like the outlook for the Fed’s monetary policy, seems very data dependent, notes Brian Daingerfield, FX Strategist at RBS.
Key Quotes
"The outlook for the USD, like the outlook for the Fed’s monetary policy, seems very data dependent. Prior to the FOMC’s October statement, the risks to the USD from US data may have become more asymmetric to the downside."
"Put another way, the market may have become more sensitive to re-pricing Fed expectations in the dovish direction than in the hawkish direction simply because the global growth and commodity price picture gives the necessary cover to stay dovish."
"By turning incrementally more optimistic on the outlook for the labour market, however, the Fed has challenged that stance, and the market should become more sensitive to rate hike expectations being re-priced in both directions."
"In this environment, this Friday’s employment report, while always a major market event, feels even more consequential for market participants craving more guidance on policy but receiving less and less from the Fed."
"Broadly, economic data suggest that the underlying pace of labour market recovery has not changed in either direction. Our forecast of +220K headline payroll gains essentially matches the current trend."