August 5, 2021
Economy

A hawkish Fed Pivot – Is the USD Rally Transitory?

USD FUNDAMENTAL HIGHLIGHTS:

  • A hawkish Fed Pivot – Is the USD Rally Transitory?
  • Was it the Fed or the FT that Marked the USD Bottom

A hawkish Fed Pivot – Is the USD Rally Transitory?

A hawkish surprise from the Federal Reserve, with the main takeaway being that the dot plot has shifted towards two rate hikes in 2023 from a previous of zero. Expectations heading into the release had been a 50/50 call that the Fed would shift to only one rate hike in 2023. Therefore, with the dot plots much more hawkish relative to expectations, USD bears have been squeezed as dollar funded carry trades unwind. That said, given the size of the move in short order, the greenback is starting to look overextended.

Was it the Fed or the FT that Marked the USD Bottom

I noted at the start of the month that there had been an increase in “demise of the dollar” reporting and coincidently, that has marked…

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