Weak risk appetite is USD-supportive – Scotiabank
|USD steady on soft risk mood. Economists at Scotiabank analyze Greenback’s outlook.
Spreads edging in the USD’s favour
The USD retains a firm undertone after six consecutive daily gains and two consecutive closes above the DXY’s 200-DMA. The DXY’s intraday range so far is holding within yesterday’s trading range, hinting at some consolidation in the USD’s overall bull run, however.
The risk backdrop is weak today, amid concerns about China’s growth outlook and investor concerns that high interest rates could weigh on stock market returns. Weak risk appetite is USD-supportive.
All major bond market yields are down but US Treasury yields have fallen less (around 5 bps) than European markets (7-10 bps), edging spreads in the USD’s favour somewhat. This is adding to USD support in effect.
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