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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.
EXECUTIVE SUMMARY
- The USD has outperformed since the first Fed hike of the current tightening cycle, bucking the historical ‘norm’ whereby the USD typically peaks shortly after the first hike in the cycle, before depreciating.
- So why haven't we seen the 'sell the fact' scenario unfold? Well, firstly, yield differentials have continued to move in favour of the USD.
- A big part of the recent widening in the USD’s yield advantage is derived from a shift higher in Fed hike expectations, as the central bank looks to fight off inflation. This has been amplified by immediate recessionary fears in the Eurozone, while the ultra-dovish BoJ has also played a part in keeping G3 yields anchored at lower levels.
- In many respects the USD is benefiting from the dollar smile theory at present.
- Click for full piece: MNI Markets Analysis - USD, Still Smiling.pdf
Fig. 1: DXY At The Onset Of Prior Fed Tightening Cycle
ource: 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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