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Jan 16 - 12:55 PM

Credit Agricole: What to Expect from the USD this Week?

By eFXdata  —  Jan 16 - 11:15 AM

Synopsis:

Credit Agricole projects a potential boost in the USD based on the expectation of a more gradual Federal Reserve easing than currently anticipated by markets.

Key Insights:

Fed's Gradual Easing Approach:

  • Contrary to market expectations, Credit Agricole believes the Federal Reserve might adopt a more gradual approach to monetary easing. This perception diverges from the current market consensus, which leans towards a more dovish stance from the Fed.

Impact of US Retail Sales Data:

  • This week's focus is also on the US retail sales data. Positive surprises in this data could further fuel the USD's strength, especially given the current market's dovish expectations regarding the Fed's policy direction.

Reactions to Hawkish Fed Comments:

  • Any hawkish remarks from Fed officials in their upcoming speeches are likely to reinforce a bullish outlook for the USD. Given the market's dovish predisposition, such comments could have a significant impact.

Conclusion:

Credit Agricole's analysis suggests a potential shift in the market's perception of the Fed's policy direction, anticipating a more gradual easing. This outlook, coupled with key economic data releases and Fedspeak, could lead to a stronger USD in the short term.

Source:
Crédit Agricole Research/Market Commentary

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