USD Strength Continues: Expert Analysis by Shaun Osborne
According to Scotiabank’s Chief FX Strategist Shaun Osborne, the US Dollar (USD) is holding firm and near recent peaks. Let’s dive into the details of this market trend:
Market Outlook:
- The DXY (Dollar Index) recently reached a marginal new high, indicating a strong market sentiment towards the USD.
- The revised rate outlook and increased market-driven rates are supporting the dollar’s strength.
- Current risk sentiment is slightly soft due to Chinese shares facing challenges and fading stimulus hopes.
- US equity futures are lower, influenced by rate and regulatory concerns.
Future Potential:
Despite the USD trading close to its estimated fair value, there may still be room for further gains with the following factors in play:
- Positive seasonality for the DXY in October and November.
- Technical indicators pointing towards a potential recovery towards the 103/104 range.
Upcoming Events:
Today’s calendar is relatively light on US data, with focus on the following key events:
- Release of Wholesale Inventories data.
- Publication of the FOMC Minutes, which may have a dovish tone but could be overshadowed by recent events.
- 10-year bond reopening and insights from Fed speakers, including Bostic, Jefferson, and Daly.
Analysis and Conclusion:
In conclusion, the USD’s firm stance is influenced by market dynamics, rate outlook revisions, and seasonal trends. While current conditions suggest limited scope for additional gains, technical indicators and upcoming events could drive the USD towards further recovery. Investors should keep a close watch on market developments and key economic indicators to navigate the evolving landscape effectively.