Dollar to resume bearish trend if SBV woes limit Fed rate hike – SocGen

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The currency market’s reaction to the SVB affair has been, on the whole, milder than other markets. Kit Juckes, Chief Currency Strategist at Societe Generalereports that contagion from the SBV crisis will decide whether the dollar falls slowly or rises quickly.

A stronger dollar if the SBV were a canary in the mine of the world economy

“The reason it matters for FX is clear: if SBV woes limit Fed rate hikes, they slow the US economy somewhat but not disastrously, and they don’t spread globally.” , the dollar will resume the downward trend that began at the end of September and was interrupted by the strong data in February.”

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“If, on the contrary, the SBV has been a canary in the mine of the world economy, the dollar will strengthen in a few months.”

Source: Fx Street

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