USD investors need more than just rhetoric to sustain a rally - Rabobank

Research Team at Rabobank suggests that the wobble in the USD since the start of the year has been evidence that investors need more than just rhetoric to sustain a rally.

Key Quotes

“The gains in the USD and US stocks into the end of last year were built around the assumption that Trump would slash regulation and increase fiscal spending to unleash a faster pace of economic growth.  While Trump failed to put any meat of the bones of his fiscal policies at last week’s press conference, the market is hopeful that Friday’s inauguration address may provide some detail.”

“Meanwhile Fed Chair Yellen is scheduled to deliver two separate speeches this week on Wednesday and Thursday night.  US economic data so far this year have produced adequate results, though it has not been exciting enough to warrant a continuation of enthusiasm demonstrated by the markets into the end of last year.  The Fed’s Bullard last week maintained a fairly pragmatic view on the US economy projecting only limited movements in rates and suggesting that there should not be any undue inflation.  Comments from Kaplan earlier last week were more upbeat.” 

“In addition to Yellen’s speeches and Trump’s January 20 inauguration, US CPI and industrial production data on Wednesday will be of note.”