This week’s slew of US data releases and next week’s Jackson Hole event are poised to provide valuable insights into the potential actions of US policymakers. Rabobank’s FX senior strategist, Jane Foley, anticipates that the Fed will lower rates by 25 bps in September and once more before the year concludes.
Anticipated Shift to 142 on a 6-Month Outlook
As Foley explains, “If this week’s US data releases indicate that the US economy is experiencing only a moderate slowdown and that the Fed is keeping pace, the USD may see some relief. However, recent shifts in US political opinion polls, particularly Harris’ performance, could introduce uncertainty for investors in ‘Trump trades’.
She continues, “A decline in Trump’s lead in the polls could limit the USD’s upward potential in the coming weeks. Our previous analysis suggested a return to fundamental evaluation in the market, with a potential USD recovery in the short term. Despite this, we anticipate USD/JPY to continue on a downward trend over the next 3 to 6 months.”
Foley maintains her view, projecting that the USD’s recent adjustment may have reached its peak. With USD/JPY appearing to establish a new trading range around 146/148, she forecasts a shift towards 142 over a 6-month period, aligning with expectations for the next BoJ rate hike.
Analysis and Implications
For investors and individuals tracking the financial markets, the upcoming data releases and events will offer critical insights into the future movements of the US economy and the actions of the Federal Reserve. Foley’s projections suggest potential opportunities for currency traders, with expectations of a USD decline in the medium term.
It is essential for market participants to stay informed and monitor developments closely, as shifts in economic indicators and political dynamics can have significant implications for investment strategies and financial decisions. By staying attuned to expert analysis and market trends, individuals can position themselves effectively to navigate the evolving landscape of the global economy.