2 Jul 2013
Flash: Vital week in shaping USD sentiment; typical bullish cycle? - HSBC
FXstreet.com (Barcelona) - From this point onwards, in view of HSBC Research Team, the U.S. economic releases must come above or at the breakeven level for the USD momentum to persist, saying that this week will be vital in shaping USD sentiment.
With one indicator down, that is, the ISM manufacturing, which actually came above expectations yesterday, at 50.9 vs 50.5, now the ISM non-manufacturing (3 July) and Nonfarm payrolls (5 July) are the key publications left. As HSBC notes, "Consensus currently expects all of the data to come in broadly around the breakeven line." If this materializes, "then this will help cement the market’s conviction that the Fed is on target to begin tapering before the end of the year" the bank said.
In defining the current environment, HSBC said "we are of the mind-set that stronger than expected data will cause tapering to happen sooner and faster – thereby boosting the USD." However, the bank notes that trailing 12 month averages are running above their respective Fed Breakeven Levels, thus "even a poor run of data could keep us on the tapering track thereby not hurting the USD too badly" HSBC said, which is suggestive of "a typical of a bull run when poor data does not harm but positive data gives that breath of wind that will see the USD power ahead" HSBC concluded.
With one indicator down, that is, the ISM manufacturing, which actually came above expectations yesterday, at 50.9 vs 50.5, now the ISM non-manufacturing (3 July) and Nonfarm payrolls (5 July) are the key publications left. As HSBC notes, "Consensus currently expects all of the data to come in broadly around the breakeven line." If this materializes, "then this will help cement the market’s conviction that the Fed is on target to begin tapering before the end of the year" the bank said.
In defining the current environment, HSBC said "we are of the mind-set that stronger than expected data will cause tapering to happen sooner and faster – thereby boosting the USD." However, the bank notes that trailing 12 month averages are running above their respective Fed Breakeven Levels, thus "even a poor run of data could keep us on the tapering track thereby not hurting the USD too badly" HSBC said, which is suggestive of "a typical of a bull run when poor data does not harm but positive data gives that breath of wind that will see the USD power ahead" HSBC concluded.