FOREX: USD Index Hovers Above Cycle Lows as Fed Decision Approaches
Sep-17 17:14
- The dollar index trades in modest positive territory today, but has spent the session broadly consolidating the steep losses this week that has seen the index trade to within 30-35 pips of the cycle lows, located at 96.38. A break of this level would place the DXY at the lowest point since February 2022.
- Yesterday’s surge for the Euro obviously places it among the main candidates to benefit from any dovish surprises and yesterday’s EURUSD highs of 1.1878 will be the immediate level to watch, before more meaningful targets at 1.1923 and 1.2000. However, given the various sell-side forecasts for a year-end rate around the 1.20 mark, perhaps the risk reward for fresh longs at this juncture is dwindling.
- Standard chartered provide an interesting view on the dollar alongside their out of consensus call for a 50bp cut today. They note the USD could well trough in the aftermath of a cautious 50bps move, if it becomes clear that the Fed will want to see a few more months of data before the next move.
- Goldmans Sachs believe that regardless of any tactical repricing today, a resumption in the Fed’s easing cycle today will gradually reduce the cost of Dollar hedging for foreign investors, which should help unlock fresh hedging flows from abroad, which in turn should be a key ingredient to Dollar underperformance versus rate differentials ahead.
- Both AUDUSD and USDJPY are within close proximity to key technical levels of 0.6688 and 146.21 respectively, with potentially more room to run should bearish dollar momentum continue in coming weeks.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: American Support For Ukraine Increases
Aug-18 17:11
A slate of recent polls show that Americans are increasingly likely to support Ukraine, reversing a longer-term trend. A University of Maryland Critical Issues poll “found that support for Ukraine among the American public is at its highest since early 2023.”
- The survey report notes: “Americans remain overwhelmingly more sympathetic to Ukraine than to Russia, with a marked increase in sympathy Republicans feel toward Ukraine since March.”
- A Chicago Council on Global Affairs poll, taken shortly before the Trump-Putin summit in Alaska, found that the American public, “support for sending military and economic aid to Ukraine has increased since March—especially among Republican Party supporters. These changes in GOP opinion could reflect Trump’s recently shifting policies and rhetoric and Trump’s own growing frustration with Putin’s “tapping him along.”
- A Pew Research Center survey found that 50% of Americans now say the US has a duty to help Ukraine, with Republican support rising to 35% from a low of just over 20% in March.
Figure 1: Share of Americans who say the US has a Duty to support Ukraine
Source: Semafor, Pew Research Center
LOOK AHEAD: Tuesday Data Calendar: Fed VC Bowman Pushed Back
Aug-18 17:08
Note Fed VC Bowman interview on Bbg that was scheduled for this afternoon has been moved to Tuesday morning.
- US Data/Speaker Calendar (prior, estimate)
- 08/19 0830 Housing Starts (1.321M, 1.300M), MoM (4.6%, -1.6%)
- 08/19 0830 Building Permits (1.393M, 1.388M), MoM (-0.1%, -0.4%)
- 08/19 1000 Fed VC Bowman interview on Bbg TV
- 08/19 1130 US Tsy $85B 6W bill auction
- 08/19 1410 Fed VC Bowman blockchain symposium, WY
- Source: Bloomberg Finance L.P. / MNI
PIPELINE: Corporate Bond Update: Starting to Launch, Eli Lilly Guidance Updated
Aug-18 17:01
- Date $MM Issuer (Priced *, Launch #)
- 08/18 $2B #Charter Communications $1.25B 10Y +152, $750M 30Y +177
- 08/18 $1.5B #Marriott Intl $400M 2Y +47, $500M 6Y +85, $600M 10Y +105
- 08/18 $1B #Corebridge Global $500M 3Y +58, $500M 7Y +88
- 08/18 $800M #Northwestern Mutual $500M 3Y +40, $300M 3Y SOFR+66
- 08/18 $500M #Ecolab WNG 10Y +67
- 08/18 $Benchmark DBJ 3Y SOFR+52
- 08/18 $Benchmark RGA Global 3Y +90a, 7Y +120a
- 08/18 $Benchmark McDonald's +5Y +80a, +10Y +100a
- 08/18 $Benchmark Eli Lilly 3Y +28, 3Y SOFR+53, +5Y +40, 7Y +48, 10Y +57, 30Y +65, 40Y +73
