Excessive USD weakness seems unjustified – Commerzbank
The USD took another battering on Monday. Economists at Commerzbank analyze the greenback’s outlook.
USD beleaguered
It would probably be too early though to write off the Dollar at this stage. The labor market report on Friday was not that bad after all. We assume that the labor market remains too tight for the liking of the Fed and that it will therefore hike its key rate once again at the end of July. It remains to be seen whether that will be the end of the rate hike cycle; and it is still uncertain how quickly rate cuts really will follow.
At present USD seems beleaguered and that might well continue for some time, but as long as the economic data paints a picture of a robust US economy, the uncertainty about when the US central bank might begin its rate cutting cycle remains high, and excessive USD weakness seems unjustified.