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Nov 11 - 12:55 PM

USD: Sevral Hits This Week But Not Completely Defeated - Credit Agricole

By eFXdata  —  Nov 11 - 11:00 AM

Credit Agricole CIB Research discusses this week's USD turn. 

"The USD took several hits this week: (1) the US midterms will likely lead to congressional gridlock, which complicates any fiscal stimulus next year amid growing recession risks in the US; (2) an underwhelming US CPI print; (3) a stronger EUR on growing hopes of a ceasefire in Ukraine and continuing government support for the Eurozone economy during the energy crisis; And, (4) China substantially easing its Covid restrictions," CACIB notes.

"The USD is not yet completely defeated, however. The US economy remains quite resilient and the Fed’s struggle against inflation is far from over. Fed speak and US retail sales next week will refocus investors’ attention on how much more work the Fed has to do tame inflation. Eurozone fiscal stimulus may not prevent recession and instead contribute to more aggressive ECB tightening and further exacerbation of Eurozone sovereign credit risks. This could hurt the EUR’s appeal as it did the UK during the mini-budget saga last month," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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