USD remains firm but gains slow – Scotiabank
22.10.2024, 11:26

USD remains firm but gains slow – Scotiabank

The US Dollar (usd) is trading flatter against its major currency peers as DXY gains show some—tentative—signs of stalling around the 104 area (which was the upper end of the range I suggested the DXY could reach at the start of the month as the index started to show signs of gaining momentum), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Gains may stall as global yields rise

“Rising US yields and more supportive spreads remain a strong source of support for the USD generally but the sell-off in fixed income is a global issue and global stocks are (mostly) lower, reflecting the gains in yields broadly. USD gains look stretched generally on the intraday and daily charts but overbought/sold conditions can persist for extended periods of time.

“US yields could creep a bit higher still in the short run—looser fiscal policy risks following the US election remain a potential issue for Treasurys while markets continue to ponder the pace of Fed rate cuts—but I do tend to think that the USD has perhaps done about as much as it can for now. Additional (significant) gains will require new catalysts and investors might well decide to reduce positioning somewhat as the Presidential election draws closer.”

“What we lack for in data releases today (just the Richmond Fed Manufacturing Index) we more than make for in central bank speak, with many global officials stateside for the IMF/World Bank meetings in Washington. The only Fed official speaking today is Harker who is not a voter this year.”

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