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Jan 14 - 10:55 AM

USD: The Hawkish Fed Tilt Has Largely Been Factored Into Market Expectations And Positioning - ANZ

By eFXdata  —  Jan 14 - 09:30 AM

ANZ Research discusses the USD outlook and notes that the bulk of Fed hawkish tilt has now been priced in by the markets.

"The US dollar has started the year in a curious fashion. On the surface, it looks like all the elements for further strength were in place: a hotter than anticipated CPI, a raft of Fed members amplifying hawkish rhetoric and the first sub 4% unemployment print since the beginning of the pandemic. So hitting a two-month low shortly after the strongest headline inflation print since 1982 caught many by surprise," ANZ notes. 

"The best explanation is that the hawkish Fed tilt, which commenced in earnest at the November FOMC meeting has largely been factored into market expectations and positioning. With market pricing and Fed rhetoric coalescing around four full rate hikes for 2022, the bulk of the Fed adjustment story could well be in the price now," ANZ adds. 

Source:
ANZ Research/Market Commentary

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