A fed rate hike in 2015 is still likely, says Jeremy Stretch, Head of G10 FX Strategy at CIBC, as he joins Zak Mir and Mike Ingram in today’s Tip TV Finance show to discuss the US interest rates and why the price action in commodity currencies presents a good opportunity for going short.
San Francisco Fed Williams still positive on rates
While the markets are now expecting the Federal Reserve to push its rate hike into 2016 after the disappointing nonfarm payrolls, Stretch presents a positive case.
He believes that the unemployment rate in the US suggests we might not be far away from seeing wage growth.
He further notes that the San Francisco Fed Chairman’s comments still present a positive stance on employment growth and a rate rise in 2015.
Commodity currencies seeing a pullback
On Forex, Stretch believes that the recent spike in AUD/USD and other commodity currencies is just a pullback phase as the currencies saw a fast downfall.
He notes that the investors still find the idea of selling commodity FX as appealing. With the Fed expected to hike ahead, commodity currencies will see a lower path, and as such the higher levels currently provide a good opportunity to sell.