Janet Yellen warned about the dangers of dithering Fed, which in the last few years is a bit more rich. She noted that the Fed can not see a big relationship between wage increases and inflation in CPI.
Meanwhile, markets are pricing a 32% chance of a March hike now, versus a 30% chance two days ago, and the odds of a rate hike by May have moved above 50%.
Changing the interest rate will be in favor of the dollar, but may hinder the rally that began with the US equities and spread to emerging market currencies. The best currencies for the week are Rouble, Rand and Lira. Selected for the week pairs trading by Societe Generale are short on ZAR/RUB and EUR/TRY.
If you need to apply the same strategy for key crosses from the G10, the equivalent pairs are trading long positions on AUD/USD and short on EUR/CAD. Both these pairs are breaking free from recent ranges and look likely to extend from here, particularly if commodity prices hold current levels or track any higher.
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