Greenback vulnerable to US GDP slowdown

Points of the US dollar story

NS US Dollar Index (DXY) After snapping the opening range in October, it fell in two weeks, with fresh data prints coming out of the U.S. It may continue to put pressure on the greenback as signs of a slow recovery undermine speculation about imminent changes in Federal Reserve policy.

Basic Forecast of US Dollar: Neutral

NS DXY Near the monthly low (93.50) Federal Reserve Board Randall QuallsExpecting a slowdown in economic activity with officialscknowledgNSthat “A broader and more sustained supply bottleneck and labor shortage than many expected.”

As a result, durable consumer goods orders are expected to decline 0.2% in September, and large numbers of mixed data prints could bring headwinds to the dollar. Meanwhile, the GDP report is expected to show a growth rate of 2.5% after an annual growth rate of 6.7%. The second quarter of 2021.

US Dollar Forecast: Greenback Vulnerable to US GDP Slowdown

On the other hand, the update of the personal consumption expenditure (PCE) price index is Federal Open Market Committee If the (FOMC) report shows another rise in inflation headlines and core readings, and the recent depreciation of the US dollar turns out to be a correction of broader trends as evidence, the impact of tenacious price increases that will sooner or later reduce financial support. Will pressure the central bank to switch gears on the next interest rate decision on November 3rd.

That said, the US dollar may face a larger revision towards the end of the month as the US GDP report is expected to show a slower recovery, but the Fed’s speculation of a policy shift is more greenback. It may continue to float as it rises longer-date Treasury yields.

— David Song, written in currency Strategist

Follow us on Twitter @DavidJSong

Greenback vulnerable to US GDP slowdown

Source link Greenback vulnerable to US GDP slowdown

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