ING economists analyze the outlook for the dollar ahead of next week's Fed meeting.
Dollar's yield position is strong, even without an hawkish Fed
We recently emphasized the upside risks to the dollar given its still strong underlying yield position, and we are finally seeing some dollar buying across the board. The next few days will tell us where the currency market is positioning itself on the spectrum of moderate and aggressive surprises for the Fed meeting.
We think the hawks' bets could be wrong again this time, as the Fed should reiterate a relatively optimistic discourse on disinflation and continue to hint at future monetary easing.
The main upside risk to the dollar is an upward revision of the dot chart, but even then, we struggle to see this having a prolonged impact on currencies if – as seems likely – the Fed continues to point out the crucial role of upcoming data, which is generally expected to start showing some signs of softening.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
