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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
USD
We believe a 'hawkish' address from Fed Chair Powell has the potential to generate a meaningful USD response, given the notable chart points in the BBDXY and recent positioning dynamics in both the FX (short USD) and U.S. FI (dovish) markets.
- The BBDXY has edged away from this week’s multi-month lows, but the recovery is far from convincing at this stage.
- Market pricing for an aggressive start to the Fed easing cycle has undermined the greenback in August, pressuring the BBDXY to the lowest level seen since March.
- Recessionary worry and dovish Fed pricing have eased from early August extremes, but questions surrounding the health of the U.S. consumer and the prospects for an economic soft landing have generated plenty of USD supply.
- 1-week, 1-month & 3-month BBDXY-weighted risk reversals continue to hover around multi-year lows, with the latter two in negative territory.
Fig. 1: Bloomberg USD Index (BBDXY)
Source: MNI - Market News/Bloomberg
Fig. 2: Bloomberg USD Index (BBDXY) 1-Week, 1-Month & 3-Month 25-Delta Risk Reversals
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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