Dollar reversal

19 February, 2015

The minutes of the January FOMC meeting appears to show a committee looking to keep rates lower for longer. This took the market by surprise and put the dollar on the back-foot. This came in the wake of the latest labour market data, which also showed better data for earnings. The other thing that came from the minutes is that the Fed want to be convinced that the pace of activity is sustainable before raising rates. The final factor, less mentioned but cannot be ignored, is the fact that many central banks have been moving to cut rates, which has the potential to put further upward pressure on the the dollar. A rate hike this year is still far from a done deal…


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