News
Currency Markets · Federal Reserve · Safe-Haven · US Dollar
The US Dollar is experiencing strong near-term bullish momentum, driven by safe-haven demand from a tech-led equity market sell-off and hawkish commentary from the Federal Reserve, according to ING analyst Francesco Pesole.
This strength is evident as the Aussie, Kiwi, Swedish Krona (SEK), and Norwegian Krone (NOK) underperform due to liquidity drying up in risk-off conditions. While the Dollar, Japanese Yen (JPY), and Swiss Franc (CHF) act as canonical safe havens, only the Dollar also provides an attractive domestic growth and carry story.
ING does not believe this marks the start of a new long-term bullish USD cycle, but near-term outperformance is expected as long as risk aversion persists. However, a future dovish repricing of the Fed curve, coupled with actual easing, would significantly weaken the greenback in the medium term.
FOMC member Austan Goolsbee's recent comments that inflation remains too high further bolster the Dollar's current support.
ING: Dollar Gains from Safe-Haven, Hawkish Fed(current)
