OctaFX | OctaFX Forex Broker
Open trading account
Back

USD: Game changer – Nordea Markets

Analysts at Nordea Markets suggest that with the US Treasury being forced to bring down its cash holdings at the Fed ahead of 1 March, when the current debt ceiling suspension runs out, the course for excess USD liquidity will most likely be at least temporarily changed.

Key Quotes

“Currently the US Treasury holds around 400bn in liquidity at the cash buffer at Fed. This cash buffer will be brought down by at the very least 200bn already 1-1.5 months ahead of the March 1st deadline. Politicians usually never strike a deal in such good time, why we consider this technical liquidity addition a high probability event.”

“This could be a game-changer (at least temporarily) for the USD, risky assets and potentially also EM, as scarcer USD liquidity has likely been a co-culprit behind a strong USD, weaker risky assets and struggling emerging markets.”

“The Q1-2019 market action may hence look reminiscent of Q1-2017, when the US Treasury also held a large cash buffer heading into a debt ceiling suspension deadline. In 2017, LIBOR-OIS tightened (as a result of less bill issuance) and the USD weakened as a consequence. We would not be surprised to see something similar happening this year.”

IPSOS Mori: Business leaders fear deteriorating economic conditions in UK - FT

The Financial Times (FT) reports the latest survey conducted by IPSOS Mori, with participants from the top 500 companies by turnover and the top 100 b
Read more Previous

EUR/USD continuing to spiral around 1.1450 heading into 2019

EUR/USD heads into 2019's first European market session struggling to hold onto 1.1450 as Wednesday sees the US Dollar take a leg up, with broader mar
Read more Next
Start livechat