USD: Moderately hawkish remarks from Williams – ING
22.11.2024, 09:59

USD: Moderately hawkish remarks from Williams – ING

Yesterday’s US Dollar (USD) rally led to a break below the key psychological 1.05 EUR/USD support and an exploration above 107.0 in DXY. There’s no one single driver of the USD move, as that was probably a combination of multiple factors, ING’s FX analyst Francesco Pesole notes.

DXY looks more likely to consolidate above 107.0

“Markets are clearly taking the escalation in the Russia-Ukraine war more seriously, which is favouring a broader rotation to haven assets like the dollar. On the macro side, jobless claims unexpectedly slowed, although continuing claims accelerated and both the Leading Index and the Philadelphia Fed Business Outlook disappointed. It was, however, some Fedspeak that likely encouraged USD buying as New York Fed President John Williams – not usually a hawk – said the US is ‘not quite there yet’ on inflation and that the jobs market needs to cool further for easing.”

“Today, PMIs across developed markets can set the direction and determine whether the dollar can extend the rally. There has been a clear divergence in activity surveys between the US and eurozone as of late which has underpinned the wide USD:EUR rate differential. Expectations for S&P Global PMIs in the US are for another strong composite read around 54.”

We don’t think there is much value in overthinking dollar strength at this stage, DXY looks more likely to consolidate above 107.0 rather than correcting lower in the short term.

 

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