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Forex Flash: The age of a strong(er) dollar looms - Societe Generale

FXstreet.com (Barcelona) - Thursday saw big moves in the US Dollar, with no clear catalyst other than the break of 100.00 in USD/JPY and more vague talk of the Fed tapering its QE program towards year-end after another strong claims number.

According to Kit Juckes, Head of FX at Societe Generale: "The point of this reaction though, is that it has been coming because the US soft patch has looked increasingly like a temporary soft patch. So US eco-optimism begets thoughts of earlier Fed tapering to replace yesterday's thoughts of later tapering. The big reaction in front end yields will be to tapering, not 'non-tapering' because they can't go down. The FX reaction will be a stronger dollar. Doesn't have to be today, but will come."

I view of Mr. Juckes: "NZD, AUD, JPY, CHF, CAD and a host of commodities are vulnerable in my mind. EMFX may well wobble, Equities could wobble, credit could wobble, but they are less clearly in trouble. And my appetite for receiving 2yr/2yr euros, paying in dollars, is unchecked."

"The age of a strong(er) dollar is dawning properly" he concludes.

Nikkei index posts fresh 5-year highs

The continued Yen weakness has shifted attention to Tokyo and the Nikkei index that has posted a fresh 5-year high above the 14600 points mark, highest level since January 2008, when USD/JPY was around the 110 figure. Other local share markets also show gains like the Australian ASX rising +0.35%, or the Shanghai Composite Index barely in the positive by +0.05%.
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