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Forex Flash: US inflation rate of 2% likely in the cards – NAB

With FOMC members also expecting - consistent with their longer-term objective - inflation of around 2.0% this equates to a real (i.e. after inflation) interest rate of around 2-2.25% which is around our view; albeit slightly higher. Is a 2% inflation rate going forward reasonable?

According to the NAB Research Team, “There are certainly tail risks of higher inflation given that the Fed is in unchartered waters regarding how to exit from its QE strategy. Upside risks are also implied by the Fed’s aim of holding interest rates low for longer than would normally be the case as the economic recovery strengthens. However, at this stage, the Fed is being backed to hold the line on inflation.”

Fundamental Afternoon Wrap: GBP bucks the trend as the strongest performer of the day

This afternoons institutional research has a broad theme, spanning across all leading currencies, with a particular interest in the Italian political situation and the BoJ pivot. Also, the ongoing question on what is happening with GBP is another highlight, as the currency surprisingly is the strongest of the day.
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Forex Flash: Expecting softer US growth in Q2 and NFP below 100K in April and May – Merrill Lynch

Merrill Lynch have their saying on global growth expectations: “The global recovery since 2Q 2012 has been supported by reviving growth in EM Asia and resilient activity in the US. Looking ahead, improving global capex bodes well for EM Asia”, they wrote, expecting softer US growth in Q2, “but healthier underlying momentum points to limited downside risks”.
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