Barclays on the fres Federal Reserve and the implications for the US dollar

From an overnight note

There appears to be little reason for the Fed to pull back from its tightening path, growth is still strong, citing influences:

  • fiscal stimulus will boost growth through until mid 2019, perhaps further
  • tax cuts have given a boost to incomes that continues
  • financial conditions are still accommodating
  • Markets may be over-interpreting the degree of caution intended by the Fed
  • failing to think fully through the consequences for the USD if foreign growth disappointments dampen the Fed's path (even if growth ex-US is weaker its unlikely that will cause a USD sell off