Because March 8th, the greenback has been trading in 1 path: downward. The dollar index, which tracks the efficiency of the US dollar against a basket of its peers, has lost much more 1.30% in the days following the ECB meeting – and Draghi’s infamous dovish speech. On Monday morning, the modd was no various in the FX industry, the back continued to retreat against the single currency with EUR/USD hitting 1.1351, its highest level due to the fact March 4th. Only the pound sterling was losing ground, thanks to heightened uncertainty stemming from the Brexit deadlock. GBP/USD slid .38% to $ 1.3240 in the course of the early European session.
For now, it appears like investors anticipate the Fed would preserve its dovish stance, anything with which we agree, and have for that reason continued to load on equities. Having said that, we think that the industry is beneath-pricing a possible enormous downside revision to financial forecast. Certainly, the Fed will released an updated version of its forecast and provided the lacklustre financial information that have been publish due to the fact the December meeting, there is small doubt it will not be quite. Consequently, we anticipate that each equities and the buck will endure this week, as investors will be forced to value in slower financial development and weaker inflation.
By Arnaud Masset