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Oct 28 - 12:55 PM

USD: Still K.I.N.G Despite Setback - Credit Agricole

By eFXdata  —  Oct 28 - 11:00 AM

Credit Agricole CIB Research maintains a bullish bias on the USD over the coming weeks.

"The USD has emerged as one the victims from the recent shift in market expectations regarding the aggressiveness of future monetary tightening as central bank focus has apparently started shifting from inflation to global growth and financial conditions. In turn, this has weighed on UST yields and US rates, helped risk sentiment recover and forced investors to take profit on stretched long-USD positions," CACIB notes. 

'That being said, the reassessment of the aggressiveness of future rate hikes is not limited to the Fed as has been highlighted by the dovish hikes from the ECB and BoC earlier this week. As a result, the USD rate advantage vs the rest of G10 remains close to its highest level of the year (using 2Y swap rate spreads). This much should continue to limit any USD losses and even support it vs low-0yielders like the EUR in the near term," CACIB adds. 

Crédit Agricole Research/Market Commentary


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