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Hardy: USD will move to new cycle highs

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Friday's nonfarm payroll data provided a big boost to the US dollar. But Saxo's John Hardy says he expects the greenback to move higher still in the run up to next week's FOMC meeting.

Hardy says the unemployment rate dropping to 5.5% in February is important, putting increased pressure on the FED to increase rates. He believes that the FOMC may drop the word 'patient' from its March statement, leaving it open for a June interest rate hike.

Moving to the Euro and Hardy offers a few words of caution. He notes that the market is aggressively short on EUR but he says there is a possibility it could find some sideways action or even support outside the dollar. He points out that USD strengthened for a few months after the Fed began its QE 2 programme.