“The Buck is on its knees, this is a direct result of how investors feel about the US inflation outlook and the Fed’s reaction” — Paul Ebeling
USD sank to a 6-yr low Vs CAD and teetered near multi-month lows Va European currencies Tuesday, as Treasury yields stalled on renewed expectations the United States will not hike interest rates anytime soon.
This week a host of Fed policymakers are scheduled to speak, and the U.S. central bank will also release minutes from its most recent meeting, which may give indications about where monetary policy is headed.
The growing market consensus is that the Fed will tolerate what it sees as a temporary acceleration in inflation, which will keep USD lower against most major currencies.
We believe the Fed will stay dovish, US real yields very negative and the dollar weakness is boosting commodity prices and supporting risk assets. And so see a more persistent rebound of the inflation this and early next yr.
Currencies have been a non-story for several yrs, but now they getting active.
Have a healthy day, Keep the Faith!