Volatility in the liquid US Treasury market carried over to the Dollar, which weakened significantly during trading on Monday. Antje Praefcke, currency analyst at Commerzbank, analyzes the outlook for the dollar.
Rate cut expectations could rise and the Dollar could depreciate further
I think the question of how long the “longer high” for interest rates will be valid should be a strong driver for the US Dollar.
And that, in turn, would mean that if US economic data, such as today’s PMIs, US third quarter GDP, durable goods, or the PCE deflator, show that the economy US market is slowing after the Fed’s strong and rapid rate hikes, then rate cut expectations could rise and the USD could depreciate further.
We have often argued that many positive arguments are already priced into the USD and that it will increasingly be unable to benefit from a few points higher in the Fed funds rate or good economic data. Now that doubts about the progress of the US economy seem to be increasing, it seems that the best days of the Dollar are behind it.
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.
