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27 Feb 2015
Latam FX space likely to sell-off prior to the Fed hike – Scotiabank
FXStreet (Edinburgh) - Senior Currency Strategist Eduardo Suarez at Scotiabank believes the Latam FX could drop sharply ahead of the decision.
Key Quotes
“Next week’s main event will likely be the release of non‐farm payrolls in the US, which next to US CPI is likely to be the main indicator for global markets over coming months”.
“Our G10 team’s take is that continued >200k payrolls, and a stabilization of inflation data is likely enough to support a June lift off from the Fed, although the pace following the initial hike will likely be cautious”.
“Our sense is that the pace of the hikes is likely to be the most relevant factor for the performance of LATAM markets, rather than the timing of the first hike, although we could still see a knee‐jerk to a first move”.
“It is worth noting that in the last Fed tightening cycle, LATAM FX sold off heading into the move, but rallied during much of the cycle. We believe something similar could happen this time around”.
Key Quotes
“Next week’s main event will likely be the release of non‐farm payrolls in the US, which next to US CPI is likely to be the main indicator for global markets over coming months”.
“Our G10 team’s take is that continued >200k payrolls, and a stabilization of inflation data is likely enough to support a June lift off from the Fed, although the pace following the initial hike will likely be cautious”.
“Our sense is that the pace of the hikes is likely to be the most relevant factor for the performance of LATAM markets, rather than the timing of the first hike, although we could still see a knee‐jerk to a first move”.
“It is worth noting that in the last Fed tightening cycle, LATAM FX sold off heading into the move, but rallied during much of the cycle. We believe something similar could happen this time around”.