© Greg Anderson
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We can approach the question from two angles, because effectiveness means different things to different people. On one hand, if we take effectiveness as the measure for all problems that are currently faced by the US, then surely the Fed's stimulus programme cannot be described as effective. However, if by "effectiveness" we analyse whether the situation became better than it was before or better if it would be without the stimulus package, then we could agree that it is in fact effective.
How is the U.S Dollar performing against the major counterparts taking into consideration the recent economic data?
Throughout the month of January the Dollar depreciated against the Euro, but appreciated against majority of the counterparts. Particularly, it advanced very strongly against the Japanese Yen, as well as the Sterling and Canadian Dollar.
What drivers will have a significant impact on the greenback during the first quarter?
One of the key drivers are interest rate and the Fed‘s policy expectations for the U.S. I believe that the market expects the Fed to keep the same statement, and the same amount of QE for the entire first quarter. However, if there was a surprise change in March, that would be a big driver for the U.S. Dollar. Little changes in speculation of when the Fed may end the QE are driving smaller movements in the Dollar. I would argue that expectations of QE ending have been brought to the fore a little bit in January and that has helped the Dollar to outperform such currencies as the Aussie, Canadian Dollar and Japanese Yen.
What is your forecast for EUR/USD and GBP/USD for the end of the first quarter?
Our forecast for EUR/USD is 1.36 and for GBP/USD – 1.60.