Renewed US dollar appreciation over the coming months – MUFG

FXStreet Insights Team FXStreet

The US dollar is broadly stable to slightly stronger ahead of the key inflation data. All in all, economists at MUFG expect the greenback to enjoy further gains over the coming months.

2s10s set to further invert

“Evidence of any broadening of inflationary pressures beyond rents in the core would likely result in further pricing of more aggressive action by the Fed before the end of the year. That would mean a further inversion of the 2s10s yield curve which is fast approaching - 50 bps. That must surely be the short-term risk.”

“Breakeven rates have dropped and other measures of inflation expectations have turned lower. So there is good news ahead in all likelihood but for now, the hard data is likely to keep investors concerned over monetary overkill which points to renewed US dollar appreciation over the coming months.”

See – US CPI Preview: Forecasts from nine major banks, soaring inflation to ease off in July

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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