Wall Street bulls: " We have seen the future of FED and... his name is Kevin"

The dollar index is up a chunky 0.6 per cent at 93.585, taking it back toward the 93.66 month-high high it hit last week in intraday trade.

While the turbulence in Spain serves as a reminder of the unwieldy political troubles the eurozone can face, traders are listing a number of factors that are helping the greenback.

Among them there is growing speculation that the hawkish Kevin Warsh could succeed Janet Yellen as chair of the Federal Reserve. A governor of the Fed in the wake of the financial crisis, was seen as a sceptic on its quantitative easing programme and left the central bank in 2011.

Albert Edwards, SocGen’s famously bearish strategist, says: "Kevin Warsh’s thinking on monetary policy is very different from the group-think we have become used to from central bankers."

"The Fed has been “captured” by a groupthink of academics led by the ‘Secular Stagnation’ ideas of his friend, Larry Summers. Rather than admitting they are wrong, this group, who failed to predict the current economic malaise, have constructed this theory to explain why ever more stimulus is required." Warsh.

Furthermore, expectations that the Fed will raise rates as soon as December are unlikely to be upset by non-farm payrolls data due on Friday. That’s because the jobs data will be clouded by weather effects after the hurricane season, meaning investors are more likely to discount the data if it misses forecasts.

Source: Financial Times

Trader Bozhidar Arabadzhiev

Original Post: ‘I have seen the future and his name is Kevin’

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