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22 Apr 2014
Fed's tone prevails in the markets - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, remarks that the recent dovish tone from the Fed is dominating the mood in the markets.
Key Quotes
"The maret is dominated by the Fed's dovish bias. US 1yr rates in 5yrs' time are priced at 3.73% this morning, at the lower end of the 3.5-4.25 range they have been in since last July."
"With Richmond Fed and existing home sales today, new home sales tomorrow and durable goods orders on Thursday, we only have second division data ahead and it looks market-friendly enough to make a test of 1900 possible for the S&P. I still like 2-10 flatteners in USD and 5-30 steepeners in Euros with rising equities, while long USD/JPY smakes sense as we edge back up after longs were flushed at the start of the month."
"It's also a pretty carry-friendly backdrop, which will support most EM currencies this week, though not the CNY, which is still being allowed to weaken slowly. The CNY's trend confounds expectations that once key levels broke, volatility would pick up. However, it also reinforces my view that the long-term nominal appreciation of the CNY is pretty much over."
Key Quotes
"The maret is dominated by the Fed's dovish bias. US 1yr rates in 5yrs' time are priced at 3.73% this morning, at the lower end of the 3.5-4.25 range they have been in since last July."
"With Richmond Fed and existing home sales today, new home sales tomorrow and durable goods orders on Thursday, we only have second division data ahead and it looks market-friendly enough to make a test of 1900 possible for the S&P. I still like 2-10 flatteners in USD and 5-30 steepeners in Euros with rising equities, while long USD/JPY smakes sense as we edge back up after longs were flushed at the start of the month."
"It's also a pretty carry-friendly backdrop, which will support most EM currencies this week, though not the CNY, which is still being allowed to weaken slowly. The CNY's trend confounds expectations that once key levels broke, volatility would pick up. However, it also reinforces my view that the long-term nominal appreciation of the CNY is pretty much over."