Nordea: USD dollar bull market still go

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Nordea with the note:

If the Doves wanted an excuse to postpone all taper talk, then they needed to look no further than the Delta strain, yet the Fed refrained from using it as an excuse. Sometimes the things that are left unsaid are the most important. At the press conference this week Powell also dodged more than five chances to say that the Fed had not reached its inflation target, yet refrained from it.

Markets have probably read the latest set of meetings from the ECB and the Fed in a slightly dovish light, but we are not as certain. Delta is not a big issue in countries with a decent vaccination pace and we have another few months of very solid macro data in store, which should increase the chances of tapering from the Fed in particular, but also from the ECB before year-end. The relative cocktail leaves us with a USD-positive taste in our mouths, in contrast to the net outcome of the FOMC meeting this week.

Chart 1. The relationship between case counts and hospitalisations has CLEARLY weakened despite the Delta strain

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.