USD: Dollar rally has more to go – ING
18.10.2024, 09:39

USD: Dollar rally has more to go – ING

US retail sales came in strong yesterday, and the timing of their release (15 minutes after the European Central Bank cut) worked perfectly to favour another leg higher in the US Dollar (USD), ING’s FX analyst Francesco Pesole notes.

DXY might be due some small and short-lived corrections

“That said, unless markets regain some confidence in Fed cuts, the dollar will hardly face downward corrections in the near term. The risk now is that markets might actually price out one cut in either November or December (currently 42bp priced in total) should core PCE and above all October jobs figures come in a bit hotter.”

“Still, that is not as big an upside risk for USD as the US election. We still think some de-risking into 5 November can lead to some defensive flows into the dollar, and that the likes of the Australian and New Zealand dollars are due another leg lower into the election.”

“Back to the US, the calendar is quite light today and only includes some housing data for September. We’ll be monitoring whether any of today’s Fed speakers (Raphael Bostic, Neel Kashkari and Christopher Waller) take an extra step to the hawkish side on the back of yesterday’s retail sales numbers. DXY might be due some small and short-lived corrections, but we can easily see it climb above 104.0-104.5 in the next couple of weeks.”

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