Fed minutes likely to echo dovish tone of meeting - BNPP

Research Team at BNP Paribas, suggests that the US front-end yields and the USD have failed to capitalise on the stronger than expected US data on Friday.

Key Quotes

“We suspect markets are reluctant to react to data in light of Chair Yellen’s dovish communication this past week and our economists think the March FOMC minutes on Wednesday are likely to echo the dovish tone.

Disagreements about the impact of international developments could encourage different interpretations but ultimately markets are likely to fall back on Chair Yellen’s cautious stance.

We see few prospects for a sustained dollar recovery for the moment and stick with our 1.16 target for EURUSD and 108 for UDJPY. BNPP FX Positioning Analysis signals USD exposure is short at -17 (on a scale of +/- 50) but there is room for short positioning to extend further.”