The US dollar has continued to strengthen after the recent rebound in global equity markets lost upward momentum. As the Federal Reserve sticks to hawkish message, economists at MUFG Bank expect the greenback to stay on a strong foot.
Expectations for terminal Fed policy rate have fallen recently
“The US dollar has derived support from hawkish comments from New York Fed President Williams who reiterated that the Fed needs to lift their key policy rate to between 3.00% and 3.50% later this year, and then to between 3.50% and 4.00% next year would be ‘perfectly reasonably’. The comments provide some pushback against the recent pullback in Fed tightening expectations.”
“The US rate market has pared back expectations for the terminal policy rate from close to 4.0% to around 3.5%. Those expectations for a dovish shift from the Fed could be disappointed in the near-term unless evidence emerges of an even sharper slowdown for the US economy based on the comments from New York Fed President Williams. It supports our view that it is premature to expect a more sustained reversal of US dollar strength at the current juncture.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.