Markets could see higher risk of slowing activity from a recurring increase in oil prices. In that case, the Fed will safely close the first chapter of the tightening cycle and move to 'wait' mode. Such a plausible scenario would be a negative for the dollar.
More Quotes from Ashraf Laidi:
We do think it's a matter of time both the Bank of Japan and government officials begin their chorus of escalating threats and warnings, which could prove ineffective .Ashraf Laidi
The metals and gold prices are already telling you that there's an inflation risk. So if they're going to push the dollar weaker, the risk of inflation could be sparked even higher if the dollar falls and oil prices remain at the level they're right now.
Ashraf Laidi
This story is important because I don't think we are going to have a lame duck secretary at a time when the president of the fastest growing nation in the world is coming here and when the forefront of relations between China and the US is on finance issues.
Ashraf Laidi
They don't want to do that signal that it wants a weaker dollar at a time when interest rates are already near the level where the Fed wants them and at a time when inflation risks remain. The Fed will be unable to push interest rates much much higher when the U.S housing sector has already begun to slow down.
Ashraf Laidi
Markets always have a tendency to overreact when they have news.
Ashraf Laidi
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