USD may still find intermittent support on dips – OCBC
|USD firmed, alongside a rise in UST yields on weak 30-year auction while Fed Chair Powell’s comments at the IMF conference aided momentum. Economists at OCBC analyze Greenback’s outlook.
Sell rallies
We remain biased to adopt a ‘sell-on-rally’ for USD as the Fed is likely done with tightening for current cycle. But any USD sell-off may require patience and could only come when market narrative shifts into trading the expectations for ‘more rate cuts in 2024’ and this would be highly dependent on how data pans out.
A more entrenched disinflation trend and more material easing of labour market tightness, activity data in the US should bring about the shift and for the USD to trade softer.
That said, USD still retains a significant yield advantage and is a safe haven proxy to some extent. As such, USD may still find intermittent support on dips especially if global, China growth momentum sputters and/or geopolitical tensions escalate or the ‘higher for longer’ narrative persists.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.