Markets are pricing in two price cuts from the Federal Reserve this 12 months. What does it imply for the greenback?
Citi discusses the USD outlook and notes that Fed price lower expectancies are more likely to stay USD at the defensive, whilst the buck additionally faces demanding situations forward of primary US releases this week, together with Would possibly retail gross sales, Commercial Manufacturing and CPI.
“USD longs stay in peril, as consistent with the CitiFX Flows & Positioning Indicator that presentations leveraged (hedge fund) promoting of USD.
Historical past additionally presentations that USD promote offs start some 1-2 months previous to Fed price cuts (maximum analysts now see the Fed chopping in July) resulting in USD weak spot by means of round three.five% on moderate (thus far, the USD Index (DXY) has fallen slightly over 1.1%),” Citi notes.
“This week’s US Would possibly CPI is more likely to garner maximum consideration given how crucial it’s to Fed price lower expectancies. Citi analysts be expecting a cast zero.21%MoM rebound in Would possibly with weak spot in transitory components most likely moderating whilst underlying elements of inflation stay cast,” Citi provides.
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