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The Dollar could have difficulty advancing significantly – Scotiabank

He US Dollar Index (DXY) It has fallen slightly so far this session, but is heading for a slight rise in the week. Shaun Osborne, chief currency strategist at Scotiabank, analyzes the outlook for the dollar.

A few more months of data are needed to convince the Fed that prices are moving sustainably toward 2%

US core PCE data was in line with market forecasts for a 0.4% MoM increase. With markets largely pricing in a firmer number, the consensus result was seen as more of a mild surprise. The annualized reading of 3 million rose slightly (2.2%, from 2.1%), but holding it near 2% will likely reassure policymakers that underlying pressures are slowly easing. A few more months of data are needed to persuade the Fed that prices are moving sustainably toward 2%.

The index remains relatively “rich” versus fair value based on spreads, at least by my estimate. This continues to suggest to me that the USD will find it difficult to advance significantly without the support of firmer data and/or higher yields at this time.

Source: Fx Street

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