USD unlikely to regather strength even on positive NFP data – Commerzbank
|The subject of inflation is so yesterday on the FX market. Thus, US Dollar bears are set to remain at the helm even on a positive Nonfarm Payrolls report, economists at Commerzbank report.
The FX market is done with the subject of inflation
“If the November labour market report surprises on the upside, the last USD bulls might get up their hopes because wage inflation is then likely to be high again. However, the labour market is typically the market on which a reversal in inflation developments is last to be observed. That means that even in case of a positive surprise today the USD bears would not be forced to change their view.”
“Once again the FX market surprises me as regards the speed at which it anticipates future developments. Our 2023 projections of USD exchange rates are based on the assumption that the market is pricing out inflation concerns step by step. The biggest risk in my view is that this will happen much more quickly and that our EUR/USD target of 1.10 will be reached much more quickly than anticipated by us.”
See – US NFP Preview: Forecasts from 10 major banks, less strong, but not weak
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