2024-06-07 09:15:00 ET
Summary
- Some softer US data has managed to pull the dollar away from its highs of the year.
- Our baseline Fed scenario should see the dollar drift lower over coming quarters, although the US elections remain the wild card. The USD/JPY rally has stalled too.
- Japanese FX intervention may again prove well-timed – as it was in 2022.
By Chris Turner
Softer US data turns the tide
Some softer US activity data - think April's jobs and retail sales reports - plus some less alarming US price data has seen the dollar correct around 2% lower over the last month. This may just be another example of the dollar thrashing around in ranges before the November US election. Or it could be a sign that a market positioned heavily long the dollar wants to lighten its load just in case the US data is about to swing softer and provide the Federal Reserve with the confidence it needs to start an easing cycle....
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Softer U.S. Story Beginning To Show In FX Markets