Dollar: Bullish reload
Bullish forecast on the dollar persists and we are gradually adding to their long positions. Janet Yellen’s last rhetoric suggests that verbal turnover “patience” will not appear in the March statement of intent at the same time you should not review this as a clear sign of a rate hike in June. In this tight monetary policy has never been for us a determining factor in the forecast for the dollar. We assume that the dollar will be strengthened by extending the differential growth and improving of investment opportunities in the US economy.
Euro: ECB in focus again
Risks which associated with Greece temporarily lost relevance because the Brussels and Athens could to agree to extend the funding for several months. In this context, market participants will switch attention to the forthcoming meeting of the ECB and the coming purchase of assets. Incentive program begins in March. Recently, signs of slight growth against the backdrop of stimulus measures, but they are unlikely to support the single currency, given the differential monetary policy and a much more rapid growth in the United States.
Yen: The situation is clarified
Data from Japan indicate improvement of the situation. We observe incoming economic statistic to determine will the dynamics pick force or not. Positive data is likely to allow the Bank of Japan not to hurry with the new stimuli, despite low oil prices. The Bank of Japan has made it clear that it was prepared to tolerate low inflation, if it is due to energy prices. Bank is in the waiting position, and their Kuroda’s comments can be assumed that the inflation strip can be reduced from the current level of 2%. These factors can support the yen crosses in.
Pound: The Pound is growing on a tributary to the government bonds
The pound is likely to has been in demand this week, taking attention the relative differential at the rate of, says, Sweden or the euro area, contributing to the growth of the pound in the crosses. In addition, capital inflows into government bonds with lower yields may also cause the British currency to rise. The pair with the dollar we hold a cautious forecast, given the political risks that could limit the inflow of capital into securities with fixed yield. We prefer short positions on EURGBP and long on GBPSEK
Frank: Focus Index CPI.
We adhere to own bearish forecast for the Swiss, and the data expected this week, can confirm it. In Tuesday will release the CPI’s report for the period after the abolition of the lower limit in the pair EURCHF. Swiss supermarkets talk about reducing prices of imported products by 20%. Low CPI index activates the expectations of the market for new monetary stimulus at the March meeting of the Bank of Switzerland. Currency reserves data will publish information about the Central Bank interventions in February.