Dollar bulls feel pressured. Kit Juckes, chief currency strategist at Société Générale, points out that dollar bulls on the run if hard landing fears are kept at bay.
Dollar sentiment is changing
“While there are still some nasty tail risks, we are in the process of seeing inflation peak, and while growth is slowing and in many cases a recession is likely, this will be a garden-variety economic downturn, with a mild recession already priced into credit spreads and currency levels.”
“Fed rate hikes are priced in, bond yields have peaked; Chinese authorities to support real estate and slowly reopen economy; emerging markets turning around and offering attractive FX entry levels and bonuses. And so on…”
“As the narrative changes, growth data becomes even more important. We won’t see inflation peaking nicely and then receding, but forward-looking measures are likely to be supportive for a while.”
“With the dollar so hot, the big question will be whether what happens next is a soft landing for the global economy, or a harder one. The harder the landing, the more volatile and dangerous the dollar’s turn will be, but a soft landing is an ideal market scenario in which credit, emerging markets and growth-sensitive currencies can do well.”
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.
