Bullard Ups The Stakes
The US Dollar has received further support into the end of the week following hawkish comments from Fed’s Bullard. Following on from Brainard who, earlier in the week, voiced her support for a quicker-than-usual balance sheet run-off, Bullard weighed in on rate projections. The St Louis Fed president upped his year end rate projection to 3.25%, suggesting larger .5% hikes at each of the remaining 2022 meetings.
Bullard’s comments make him by far the most hawkish of the Fed members. However, the minutes from the March meeting this week showed that many members supported larger .5% hikes. With this in mind, the market is now repricing rate probabilities over the remainder of the year with USD seeing fresh demand subsequently.
In light of recent Fed commentary and the minutes released this week, the market has now moved to price in a .5% hike at the upcoming May 4th meeting. Incoming US data over the month will now be key to focus on with USD likely to receive further demand from any strong readings.
Where to Trade USD Rally?
NZDUSD
The reversal in risk sentiment this week has seen NZD falling back sharply against USD. With the market now moving to reprice upcoming Fed meetings, NZDUSD looks likely to fall further, particularly if risk assets remain under pressure over Russia-Ukraine uncertainty. Look to stay short below .6863 with fresh shorts on a break of the bull channel and .6806 area, targeting .6708 initially.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.