FOMC strikes back; dollar rebound has further to go

The dollar has continued to strengthen in the wake of a relatively hawkish message from the FOMC. Combined with a generally more neutral stance from other central banks this week, that has taken the DXY index to its strongest level since late July. While we expect another 25bp rate cut from the FOMC in December, Chair Powell’s generally upbeat message and growing hawkish dissent on the committee, strengthens our view that money markets are still discounting too many Fed cuts overall. In turn, that suggests to us that the greenback’s rebound has further to run.

Starting 3rd November, the analysis and data previously included in the FX Weekly will become part of an enhanced Monday edition of the Capital Daily. The expanded report will be published around the Europe morning/Asia afternoon session. The FX Weekly will no longer be published separately.