Some room for a stronger USD through the end of March – CIBC
|The Federal Reserve (Fed) is priced to start easing a month too soon. Therefore, economists at CIBC Capital Markets expect the US Dollar (USD) to remain strong in the near term.
USD to gradually depreciate through the end of 2024
We’re still resolute in our call for one last round of USD strength before this quarter is out. That’s largely because there’s enough evidence now that the US economy has adapted to higher rates far better than most have expected, and we still don’t think markets are paying full tribute yet to this theme.
Markets have recalibrated and are now pricing in decent odds of that first cut coming at the June meeting. That’s still a bit before when we expect the Fed will ease (July), and further recalibration there are in keeping with our call for a firmer USD in the near term.
Beyond March, we have the USD profile trending lower as the economic outlook outside of North America improves. Additionally, longer-term valuations still look very unfavourable for the USD. Market participants outside of the US should look to take advantage of the higher USD in the coming months and lock in longer-term hedges while the getting is good.
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.