ING Research discusses the USD outlook in light of yesterday's FOMC September policy decision.
"We are a little surprised that the dollar has not pushed further ahead overnight, although this could be down to two factors. The first is that investors do not seem to agree with the Dot Plots that foresee the policy rate being taken to a median of 1.8% in 2024. We were looking at the 1m OIS priced three years' forward last night and after initially rising 4-5bps on the hawkish Dot Plots, it has since slumped to be lower day-on-day," ING notes.
The second factor taking the steam out of the dollar rally may be some progress on the Evergrande story, where a press release said that a CNY bond had been restructured - prompting a 5 cent rally in its USD bond. On balance we suspect the dollar remains bid on dips against low-yielding Europe in particular," ING adds.