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- US dollar to depreciate as taper risk diminishes – MUFG
US dollar to depreciate as taper risk diminishes – MUFG
FXStreet reports that economists at MUFG Bank discuss US dollar prospects.
“Our take-away from the updated Fed guidance is that QE tapering will not be rushed and the prospect of an earlier than expected taper announcement, say in September, has diminished. The key statement that the ‘Committee will continue to assess progress in the coming meetings’ suggests the assessment on meeting ‘further substantial progress’ will take longer.”
“The July FOMC communications appear to have helped restore credibility in the new monetary policy framework that implied a looser for longer monetary stance in order to lift inflation expectations.”
“We believe the latest Fed communication reinforces the prospect of renewed USD weakness. However, the weakness will be more specific to G10 FX where central banks will shift to a tighter stance. Versus EUR and CHF for example, we expect limited USD weakness.”
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