The USD rallied across the board on Wednesday as quarter-end flows probably favoured a broad positioning adjustment, ING’s FX strategist Francesco Pesole notes.
“Based on the latest CFTC figures, we calculate that the dollar was in net-short territory against the other reported G10 currencies on 17 September, but that amounted to a relatively small 4% of open interest.”
“Today, the US data calendar is quite busy. The third GDP/PCE second-quarter print should not surprise, and jobless claims may be the more market-moving release along with August’s durable goods orders and the leading index. On the Fedspeak side, Chair Powell will give pre-recorded opening remarks, and there is a long list of other speakers: Collins, Bowman, Williams, Barr, Cook and Kashkari. There should be some extra colour on each member’s Dot Plot submission.”
“The quarter-end flows may continue to offer the USD some modest support today, barring negative US data surprises, but the positioning picture did not look that heavily skewed to dollar shorts to justify large readjustments. Ultimately, stronger US data is needed to convince markets to abandon 50bp cut bets. That may not happen overnight, and there is still a substantial risk the dollar will stay capped into the US election.”
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