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USD likely to rally on release of FOMC Minutes – Scotiabank

FXStreet (Barcelona) - FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, sees an upside risk for the USD ahead of the FOMC Minutes release.

Key Quotes

“Another record close in U.S. equities yesterdays combined with the release of U.S. TIC flows, which showed large foreign buying of almost all U.S. assets, including Treasurys, corporates & agency bonds as well as equities, highlights an important driver of USD strength.”

“On a relatively basis the growth dynamic in the U.S. is encouraging large foreign inflows and USD buying. This is likely to be an ongoing trend in 2015.”

“Today’s focus will be the FOMC minutes at 2pm from the October 28/29th meeting; when WTI oil was trading at $82 and the USD had already appreciated 10%. We expect the risks to the minutes are tilted towards USD strength.”

“The FX market has shifted from that broad USD rally to JPY weakness leading the other currencies lower. This is a change from the Q3 story, which was based on a broad USD rally.”

“This change does not shift our generally bullish USD outlook, but it does suggest that upside momentum in the USD is searching for a catalyst before it shifts higher still.”

“The catalyst is likely to come from either a shift in monetary policy or the economic backdrop.”

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