FX Week Ahead: Hawkish Fed & robust US data should be US dollar supportive - ING

Christopher Turner/Global Head of Strategy - Petr Krpata, CFA/Chief EMEA FX-IR Strategist and Viraj Patel/Foreign Exchange Strategist at ING, noted,  "Events in the US will once again take centre stage, with the FOMC meeting and a heavy US data docket likely to be supportive of the recent US reflationary theme in markets. While we'll only get a statement from the FOMC, we suspect dollar bulls are likely to cling onto subtle hawkish tweaks - especially if the Fed thinks it needs to prepare markets for a possible March rate hike.

Key Quotes
"Central bankers also meet in Japan and the UK next week. Look for the BoJ to retain a fairly dovish tone; recent upward pressure on JGB yields prompted the central bank to step up the pace of bond purchases and we suspect policymakers will be wary of sending a false hawkish signal. equally, the BoE 'Super Thursday' meeting is unlikely to have much of an impact on GBP; calls for a hike seem premature given the level of political uncertainty, which is set to remain high after the Supreme Court's Article 50 ruling and the UK government's 'quick and dirty' Brexit bill. It's strange to see GBP performing so well when the path towards a 'hard' Brexit remains firmly on the table; strategically, we remain bearish on GBP/USD and look for fresh catalysts (namely dollar strength) to see a short-term move back towards the 1.24 level."