Fundamentals remain compelling for an even stronger USD – MUFG
|The US dollar has continued to strengthen at the start of this week resulting in the DXY rising up back above the 109.00 level. Economists at MUFG Bank believe that it is hard to argue against an even stronger US dollar in the coming months.
Fed policy and European energy woes boost relative appeal of US dollar
“The strength of the US dollar reflects expectations that the Fed will continue to deliver a relatively hawkish policy message at this week’s Jackson Hole symposium by reiterating that it still has work to do lifting rates to get inflation under control despite recent evidence that inflation pressures are starting to ease albeit from already elevated rates.”
“The strength of the US dollar was boosted further by the worsening negative energy price shock in Europe. The latest jump in gas prices follows the announcement at the end of last week from Gazprom that it is planning more maintenance work on the Nord Stream 1 pipeline from early next month which has stoked fears that it could be used as another excuse by Russia to further reduce supply from the already depleted rate of around 20% of the norm.”
“In the current difficult circumstances, it is hard to argue against an even stronger US dollar in the coming months with a dovish Fed pivot looking less likely in the near-term as well.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.