Hurdle for Fed hikes 'very high' as USD shows little sign that it has found a floor yet

Matthew Ryan, CFA Ebury

Second-tier economic data from the US generally confirmed the narrative of moderating demand and inflationary pressures, lifting some of the pressure on the Federal Reserve to hike rates next month.

With very limited forward-looking data releases between now and the September meeting, we think the hurdle is very high and expect no change. Pressure from the Trump administration to keep rates low so as to inflate away the growing debt load will also work against the FOMC hawks.

Meanwhile, the dollar has resumed its path of least resistance downwards, with little sign that it has found a floor as yet.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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