According to WinThin, Global Director of Currency Strategy at BBH, The US dollar receives some support from safe-haven flows on Tuesday, amid rising diplomatic tensions in the wake of US House Speaker Nancy Pelosi’s planned visit to Taiwan. In addition, it maintains its bullish outlook for the dollar in the medium term, pending the Fed spokesperson and the important US macroeconomic data this week.
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“The dollar is getting limited traction as risk-off sentiment takes hold. DXY is up for the first time after four consecutive days down and is trading near 105,541 as the visit of the chairwoman of the House Pelosi to Taiwan has caused tensions with China We stand by our call for dollar strength and believe markets are misreading the Fed’s commitment to reduce inflation However the USD is unlikely to do much traction in the absence of strong economic data. US data this week will be key to the dollar’s medium-term outlook.”
“Fed spokespeople will be scrutinized this week. We don’t think Fed officials are very happy with the market’s dovish stance on their decision last week and they are likely to back down this week. Therefore, brace yourself for comments leaning decidedly hawkish. Evans, Mester and Bullard will speak today. Harker, Barkin and Kashkari will speak tomorrow. Mester speaks again on Thursday and Barkin on Friday.”
“Over the weekend, ultra-moderate member Kashkari reiterated that the Fed is focused on lowering inflation, noting that “We are committed to lowering inflation and we are going to do what we have to do. We are a long way from achieving an economy that returns to 2% inflation, and that is where we have to go.”
Source: Fx Street
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