My subscription
...
Filters
My Subscription All Publications

Dollar edges higher ahead of the September FOMC meeting

The dollar has risen against most currencies as markets have remained quiet ahead of next week’s monetary policy announcements. In addition to the FOMC, more than a dozen central banks in developed and emerging market economies will meet during a week that may set the tone for FX markets over the coming months. While we doubt that the FOMC will set out a plan for tapering its asset purchases, the new economic projections may shed some light on its reaction function given building cyclical inflationary pressures. Our view remains that inflation in the US will stay elevated for longer than the FOMC and investors currently anticipate, in turn supporting higher US yields and a stronger dollar.
Jonathan Petersen Markets Economist
Continue reading

More from FX Markets

FX Markets Weekly Wrap

Dollar struggles despite equity sell-off

After another volatile few days across financial markets, the US dollar looks set to end the week lower against most major currencies. Given the renewed falls in “risky” assets, that is arguably somewhat surprising: the dollar generally does well when risk sentiment worsens. The simplest explanation, as we suggested last week, is that currency markets tend to mean revert, especially following large and rapid moves. After its recent rally, the dollar was due a pause. The key question now is how long that pause lasts. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.

20 May 2022

FX Markets Weekly Wrap

The dollar rally might be due a pause

Despite a reversal today, the US dollar looks set to appreciate for the sixth week running as “risky” assets remain under pressure. The DXY index has had its largest six-week gain since mid-2016 (while the S&P 500 has had its worst such period since the onset of COVID-19 in early 2020). And, despite Wednesday’s above-expectation US CPI print pointing to strong prices pressures and continued hawkish rhetoric from Fed speakers, government bond yields dropped back sharply this week. In other words, financial markets appear increasingly driven by fear of an economic slowdown.

13 May 2022

FX Markets Update

CEE currencies face external and domestic headwinds

We think that currencies in Central and Eastern Europe (CEE) will depreciate further against the euro over the rest of this year. Within the region, we anticipate that the koruna will continue to outperform and the forint will remain a regional laggard – we forecast it to fall by another ~4.5%, to 400/€, by end-2022. RBA Drop-In (18th May): How fast and far will the RBA go to raise rates – and what will this mean for Australian bond yields and the aussie? Join our 20-minute briefing on Wednesday. Register now.

12 May 2022

More from Jonathan Petersen

FX Markets Update

Canada’s election unlikely to be a key driver of the loonie

We doubt that the outcome of next week’s federal election in Canada will have much bearing on the economy and the loonie. Instead, we still think that bond yield differentials and oil prices will be the main drivers of the Canadian dollar, and will push it lower against the US dollar over the next few years. In view of the wider interest, we are also sending this FX Markets Update to clients of our Canada service

17 September 2021

FX Markets Update

What China’s economic slowdown may mean for FX markets

The growing risks associated with the property sector in China underscore our view that the renminbi will weaken against the US dollar before long, even if financial stability risks do not escalate much further. We think the currencies of some economies with strong ties to China will come under pressure, too.

16 September 2021

Capital Daily

We doubt the rally in the US dollar is over

Although the US dollar, in aggregate, has fallen back sharply from its high of the year over recent weeks, we expect it will soon reverse course and strengthen against most currencies. CE Spotlight 2021: The Rebirth Of Inflation? We’re holding a week of online events from 27th September to accompany our special research series. Event details and registration here.  

10 September 2021
↑ Back to top