Fading Fed expectations are supportive – Scotiabank
21.11.2024, 13:05

Fading Fed expectations are supportive – Scotiabank

The US Dollar (USD) is mixed to somewhat firmer on the day. Soft (but off earlier lows) stocks and renewed focus on Ukraine after Russia launched an attack using an ICBM are supporting JPY outperformance, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD mixed versus majors

“Firm price action in the USD overall yesterday keeps the focus on scope for more gains in the near-term as the DXY continues to closely track the pattern of trade that followed President Trump’s first win. A minor dip in the USD is a risk around the turn of the month before renewed gains into December, if the pattern continues to repeat.”

“Note that Fed rate cut expectations for the December FOMC are slowly receding, with just 13bps priced in now—effectively a 50/50 call—despite a lack of major data points this week. Pricing was closer to 20bps a week ago. The Fed’s Bowman (a voter) said yesterday that the Fed should move cautiously on policy and that the neutral rate may be ‘much higher’ than pre-pandemic levels. There is data to work through this morning after yesterday’s calendar lull.”

“The Philly Fed Business Outlook survey and weekly claims data are released at 8.30ET. US Leading Indicators and Existing Home Sales are out at 10ET while the KC Fed Manufacturing Index drops at 10.30ET. The Fed’s Hammack, Goolsbee (non-voter) and Barr are speaking later. Japan releases October CPI data this evening.”

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