News & Analysis

Developments since our Q3 USD outlook have kept the broad US dollar elevated as the upside risks to our mildly bearish stance materialised. In the third quarter, supply chain disruption and increasing Covid cases in parts of the world due to the Delta variant weighed on global growth conditions, while rising inflation pressures added to the deterioration in risk sentiment. Meanwhile, a string of net hawkish FOMC meetings combined with the inflationary backdrop and led to the US Treasury curve bear steepening. Amid the global backdrop of lower growth and higher inflation, the dollar is likely to stay well bid in Q4. However, our latest forecasts now see the DXY index trading a percentage point lower than current spot levels and back towards highs of its previous trading range as the aggressive repricing in FX markets overextended in early October given our views on back-end US rates this year.

You can read our October USD Update here:

DOWNLOAD THE FULL REPORT

 

Author: Simon Harvey, Senior FX Market Analyst

 

 

Disclaimer
This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.