US Dollar Index: Upside still lacks real interest rate support – Westpac
The US Dollar Index (DXY) is resilient despite the delay in Fed taper timing. Lingering doubts about Delta’s impact on the global rebound should continue to buttress DXY too. The 92-94 range is set to hold for now, economists at Westpac report.
DXY expensive to yield spreads
“Labour demand remains robust and service sectors PMIs are holding at multi-year highs. The US seems well placed to sustain recovery momentum. That, and lingering concerns about Delta’s impact on the global rebound, should help shore up the DXY near term.”
“A more sustained DXY appreciation path still lacks foundational underpinnings – more supportive real interest rates. Real interest rate differentials have stabilised. But they’re unlikely to move back more convincingly in the USD’s favour until there’s a significant divergence in monetary policy outlooks between the Fed and the ECB.”
“DXY is likely to bide its time comfortably within recent ranges (92.0-94.0) into next week’s FOMC meeting, and likely beyond.”
Author
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.
