Why has the US dollar sunk in the lead up to the FOMC decision?
Why has the US dollar sunk in the lead up to the FOMC decision?
Bloomberg Economics says “We expect Powell to make a hawkish pivot” regarding the FOMC’s decision this Wednesday. Expectations for rate reductions have been pushed further into 2024.
So, why is the US dollar underperforming to start this week? And does this open up an even more attractive entry point to a long dollar position?
One reason dragging the USD down could be the possible Japanese government intervention as Japanese banks have been reportedly dumping US dollars. The Japanese yen rebounded about 1.4% to 156.000 per greenback after weakening to as low as 160.000 earlier in the session
Another reason could be the prevailing optimism surrounding peace negotiations between Israel and Hamas in Cairo, which has invigorated appetite for riskier assets, like the NZD/USD which is up 0.70% as of writing.
In Australia, robust inflation figures have surpassed expectations, fueling speculation that the Reserve Bank of Australia may defer any interest rate cuts in the near term. The AUD/USD is up 0.55% as of writing.
Across the Atlantic, the United Kingdom's Chief Economist Huw Pill has pointed to recent economic data that might bring the prospect of a rate cut closer, although he remains guarded in his assessment, suggesting that such a move may still be some distance away.
Bloomberg Economics says “We expect Powell to make a hawkish pivot” regarding the FOMC’s decision this Wednesday. Expectations for rate reductions have been pushed further into 2024.
So, why is the US dollar underperforming to start this week? And does this open up an even more attractive entry point to a long dollar position?
One reason dragging the USD down could be the possible Japanese government intervention as Japanese banks have been reportedly dumping US dollars. The Japanese yen rebounded about 1.4% to 156.000 per greenback after weakening to as low as 160.000 earlier in the session
Another reason could be the prevailing optimism surrounding peace negotiations between Israel and Hamas in Cairo, which has invigorated appetite for riskier assets, like the NZD/USD which is up 0.70% as of writing.
In Australia, robust inflation figures have surpassed expectations, fueling speculation that the Reserve Bank of Australia may defer any interest rate cuts in the near term. The AUD/USD is up 0.55% as of writing.
Across the Atlantic, the United Kingdom's Chief Economist Huw Pill has pointed to recent economic data that might bring the prospect of a rate cut closer, although he remains guarded in his assessment, suggesting that such a move may still be some distance away.
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Free TradingView Essential with BlackBull Markets: www.blackbull.com/en/platforms/tradingview/?utm_source=tradingview