FOMC marked a 'U-turn' for USD, Credit Agricole says
Credit Agricole CIB FX Strategy Research notes that the dollar has staged a partial recovery after yesterday's FOMC announcement.
In our view, investors continue to under-estimate the Fed's resolve to normalize policy. We believe the outcome of yesterday's meeting underscored that the FOMC has become less datadependent and more focused on longer-term policy normalization in order to both avoid the risk of hiking too fast if wages and inflation do pick up but also to be able to cut rates by the next economic downturn.
"We believe that long USD/CAD remains an attractive way to position for this view as, contrary to Fed expectations, BoC expectations have excessively moved in a hawkish direction, CACIB argues.
In line with this view, CACIB maintains a long USD/CAD position from 1.3190 targeting a move back to 1.38.
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