Lower US yields and more intense Fed speculation will keep the USD on the defensive – Scotiabank
The USD is trading mixed to a little softer overall on the session so far. Economists at Scotiabank analyze Greenback’s outlook.
The positive risk mood broadly will add to USD headwinds
Global stocks are positive, bonds are firmer (Eurozone debt is outperforming slightly) and crude oil prices are narrowly mixed; the positive risk mood broadly will add to USD headwinds.
Fed officials have tried to dampen early rate cut speculation but without much success following Powell’s comments last week. But central bankers elsewhere are doing a better job of reasoning with markets.
Swaps have around 20 bps of cuts from the Fed through March priced in, with around half that easing priced in for the ECB and BoC and virtually nothing for the BoE over the same period. Lower US yields and more intense Fed speculation will keep the USD on the defensive.