Any USD dip is likely to be temporary

Payrolls surprise stalls the USD rally…for now

US payrolls have done it again, surprising the market in way that changes the pricing of volatility, this time downward.

The picture that has emerged is better North Atlantic growth conditions, but with Treasury yields likely range bound until at least the 22-24 August Fed Jackson Hole conference, if not the 6 September US payrolls data. This mix has continued to support USD strength against most G10 currencies but has created conditions for temporary EM currency strength.

However, we think the Fed is still on track to announce the beginning of reductions in its asset purchases at its September meeting. At a minimum, Fed officials are likely to guide markets to keep this possibility alive.

This leads us to view any dollar weakness over the next several weeks as a temporary pause in a trend move stronger.

Read the full report


Powered by WPeMatico

This entry was posted in Forex. Bookmark the permalink.

Comments are closed.