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10 Dec 2014
USD subject to ‘seasonal’ softness – TDS
FXStreet (Barcelona) - The TD Securities Team notes that the pullback in USD should not be surprising as the currency tends to experience some seasonal softness in December, anticipating it to overcome its soft patch in a relatively short order.
Key Quotes
“The USD has been struggling against most majors this week amidst lower UST yields and falling equity prices, which seems at odds for the a typical risk-off environment. Two facts are worth highlighting, though. First, the USD decline of the last few days seem less peculiar in the context of the massive USD rally of the recent months. The second is a seasonal tendency for the USD to soften in December, only to come back stronger in the New Year.”
“The second fact worth noting is that the greenback tends to experience some seasonal softness in December. In the relatively limited history of floating exchange rates, there does appear to be something of a seasonal quirk in the USD’s performance.”
“In any case, we still trust that the USD will overcome its recent soft patch in relatively short order, as the key fundamental factors powering its outperformance since early-summer (economic growth differential and monetary policy divergence relative to the Eurozone and Japan, improved external and fiscal balances, etc.) will remain very much in place for the next two years, at least.”
“As such, USD weakness in the next few weeks will represent a buying opportunity.”
Key Quotes
“The USD has been struggling against most majors this week amidst lower UST yields and falling equity prices, which seems at odds for the a typical risk-off environment. Two facts are worth highlighting, though. First, the USD decline of the last few days seem less peculiar in the context of the massive USD rally of the recent months. The second is a seasonal tendency for the USD to soften in December, only to come back stronger in the New Year.”
“The second fact worth noting is that the greenback tends to experience some seasonal softness in December. In the relatively limited history of floating exchange rates, there does appear to be something of a seasonal quirk in the USD’s performance.”
“In any case, we still trust that the USD will overcome its recent soft patch in relatively short order, as the key fundamental factors powering its outperformance since early-summer (economic growth differential and monetary policy divergence relative to the Eurozone and Japan, improved external and fiscal balances, etc.) will remain very much in place for the next two years, at least.”
“As such, USD weakness in the next few weeks will represent a buying opportunity.”