MNI: Fed’s Schmid Says Rates Nearing Neutral, Can Be Patient

MNI BRIEF: Gilt Moves Orderly, 'So Far, So Good'- BOE Breedon

MNI: Fed’s Collins Calls For Gradual Approach To Rate Cuts

MNI BRIEF: Banxico Set To Consider Larger Rate Cuts - Minutes

MNI BRIEF: Mexico Inflation Up To 4.21%, More Rate Cuts Loom

MNI China Daily Summary: Thursday, January 9

EZ/UK Bond Supply Calendar: EU Synd; IT Auction, BoE APF Mon

MNI: EUROZONE NOV RETAIL SALES +0.1% M/M, +1.2% Y/Y

MNI: GERMANY NRW DEC CPI +0.5% M/M, +2.5% Y/Y

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2025 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

FOREX: May Not Need to Re-Price 125bps Fed Cuts for USD Index to Revisit Lows

FOREX
  • The USD Index has traded through the Wednesday/Thursday low today and, despite today's muted price action and limited volatility, looks softer headed into the Wednesday US CPI print. A close at current, or lower, levels for the USD Index would keep the 50% retracement of the bounce off early August's 102.160 under pressure.
  • Instead, the limits for further slippage for the greenback are the pricing of the unlikely outcome of a 50bps rate cut in September - a minority view seen by few on the Street. The USD Index's 102.160 print coincided with Fed cumulative Fed pricing of ~125bps for 2024 (vs today's ~100bps) - an unlikely outcome of tomorrow's CPI print.
  • However, a sizeable miss on US CPI, allied with post-Olympics political solidity in France and a narrowing FR-GE yield spread would add considerable pressure to the USD Index via EUR demand. EUR sits as comfortably the largest contributor to the USD Index and an overlooked catalyst for USD strength across June.
  • Fed expectations are naturally key here - and the JPY short-covering rally and persistent build in the GBP net long are no longer the distraction they once were, resulting in cleaner positioning across G10 relative to just three weeks ago.
BulletFixed Income BulletsForeign Exchange Bullets

To read the full story

Close

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.