Senior Analyst at Danske Bank Jens Pedersen believes the greenback will remain well bid ahead in the week.
“Global markets stabilised late last week on better US data and expectations that global policymakers eventually will provide some support for markets. The USD has fallen against safe-haven currencies such as EUR, JPY and CHF in recent weeks”.
“Closing down of carry strategies and FX-hedging EUR buying can explain the price action”.
“However, as markets stabilise the USD should begin to rally again versus the preferred funding currencies”.
“We interpret Vice Chairman Fisher’s remarks at the Jackson Hole conference as that Fed’s bar for raising rates is not that high”.
“Given how much US rate expectations have been scaled back, we interpret Fisher’s comments as slightly USD bullish and expect USD support versus G3 currencies to remain in the beginning of the week”.