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Jan 10 - 02:55 PM

ING: Assessing the USD Outlook Ahead of US CPI Data

By eFXdata  —  Jan 10 - 01:30 PM

Synopsis:

ING offers insights on the US Dollar's (USD) performance and its outlook in light of the upcoming US Consumer Price Index (CPI) data for December.

Key Insights:

  1. Quiet Market Dynamics:

    • The FX market has had a subdued start to the week, with a lack of clear direction as it awaits the upcoming US CPI release.
  2. Modest Dollar Support:

    • The USD has seen some modest support, especially against commodity currencies, influenced by a lackluster performance in the equity markets.
  3. Expectations of Federal Reserve Policy:

    • ING anticipates a gradual adjustment in the market’s expectations regarding the Federal Reserve’s rate policy, forecasting a delay in the initiation of the easing cycle.
  4. Impact on Risk Assets and USD:

    • This anticipated shift in rate expectations is expected to create instability for risk assets in the near term, potentially aiding in a recovery of the USD before a more defined downward trend takes hold.

Conclusion:

ING's analysis suggests a cautious market environment, with the US Dollar finding temporary support amidst anticipation of key economic data and expectations of Federal Reserve policy adjustments. The coming days, particularly the release of the US CPI data, are likely to be pivotal in shaping the near-term trajectory of the USD and influencing market sentiment.

Source:
ING Research/Market Commentary

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