The USD is trading a little firmer to start the week but the US Dollar Index (DXY) remains effectively range-bound. Economists at Scotiabank analyze Greenback’s outlook.
USD firmer in quiet trade
The MLK Day federal holiday today will keep things relatively quiet, and ranges are unlikely to extend significantly in the absence of US market participants. But the somewhat firmer USD tone is appropriate given the recent strength in US economic data and comments from Federal Reserve officials who have suggested market pricing for a March rate cut (19 bps at writing) is optimistic.
This week’s US data run – regional Fed activity data, Retail Sales, IP, U. Michigan Sentiment and the Beige Book etc. – may help resolve the apparent disparity between market pricing for early rate cuts and the undertone of the US economy one way or another.
Technical signals and seasonality lean towards the USD strengthening somewhat in the next few weeks still, however.
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