In quiet markets, the US Dollar (USD) is edging gently lower, ING's FX strategist Chris Turner notes.
DXY falls towards 101
“The big question over the next week is whether the dollar is just drifting to the bottom of the medium-term range and will soon rebound, or whether we are about to see the start of an important downside break-out. When it comes to the speculative community, positioning in both EUR/USD and USD/JPY looks now to be around flat – meaning investors are waiting for the next big thing.”
“We prefer to run with the dollar bear trend for the time being as the Fed prepares the market for its first cut in September. Additionally, we would re-iterate that USD price action has been quite poor and it is notable to see DXY trading under the 5 August low, while two-year US swap rates (now 3.82%) are still some 40bp above the levels seen in early August.”
“Given the prospect of some downside revisions to the US employment picture when the Bureau of Labour Statistics releases some provisional benchmark revisions tomorrow, we expect the dollar to stay on the soft side. 102.15/102.25 may well now cap DXY rallies and we have a bias towards 101.”
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