Liftoff A Dec 2015 Sputter, 2016 USD Plus - Citi
In its weekly note to clients, CitiFX draws a strong distinction between the immediate USD impact of the Fed's likely liftoff next week and how it will play out in 2016.
"We think the Fed has no incentive to sound hawkish next week and its priority will be to establish that the US economy is robust enough to deal with the beginning of normalization.
We doubt that they want a strong USD to follow immediately on liftoff as it would probably be associated with weaker equities and pressure on asset market during a period of low liquidity.
Once the principle normalization has been established, we think the Fed can revert to a data dependent hiking path which may imply a faster pace of hiking subsequently.
This may not come through immediately in 2016 strengthen as the rate path firms. but as H1 progresses we expect to see the USD strengthen as the rate path firms," Citi argues.
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