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USD momentum and FX volatility concerns – DBS

The DXY had firmed slightly above 104, but the US Dollar’s (USD) momentum could be tapering off already, DBS’ FX & Credit Strategist Chang Wei Liang notes.

USD momentum fades

“Re-repricing in US short-end rates looks done with less than two 25bps rate cuts priced over the next two FOMC meetings. Markets are also fully appreciating Trump’s presidential chances, given closely matched poll numbers in the key swing states.”

“On the long-end, US 10Y yields have already risen back to pre-Jackson Hole levels at 4.20%, which is remarkable given the start of Fed rate cuts in September, with more to come later.”

GBP/USD: Can dip towards 1.2940 – UOB Group

The Pound Sterling (GBP) could dip towards 1.2940 again before a more sustained rebound is likely.
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EUR: ECB hawks fly low – ING

EUR/USD briefly printed below 1.0800 overnight. Markets could see the pair stabilise around current levels for a bit longer, but the chances of a sustainable rebound remain slim as the USD:EUR two-year swap rate gap is now at its widest since May (145bp) and it’s hard to pinpoint any clear driver for a retightening in the near term, ING’s FX Francesco Pesole notes.
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