Both politics and monetary policy will have to be considered in the first part of the summer, says Francesco Pesole, FX Strategist at ING.
The US dollar is the current favorite as a hedge against political uncertainty
“The US Dollar (USD) has emerged as the favorite hedge amid political uncertainty. If the US May Core PCE on Friday is at the 0.1% month-on-month consensus, the near-term downside for the USD against European currencies may be less pronounced as markets could continue to favor defensive positions ahead of the vote in France on Sunday.”
“However, by removing EU political noise from the equation, the PCE data should, in our view, fuel an increasingly dovish narrative from the Federal Reserve this summer, culminating in a rate cut in September. It is “That’s why we remain generally bearish on the USD for the end of next quarter.”
“Today, the only data release in the US is the Dallas Fed Manufacturing Index, while three Fed speakers will make remarks: Christopher Waller, Austan Goolsbee and Mary Daly. We believe the DXY may trade above of 106.0 and potentially test the May high of 106.50 heading into events at the end of this week.”
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.
