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USD Limited Downside: Buy Dips

Published 04/30/2015, 01:16 PM
Updated 07/09/2023, 06:31 AM

The USD has been more supported in reaction to yesterday’s FOMC announcement. Although the central bank acknowledged for somewhat more muted growth momentum it was indicated too that such weakness is regarded to be temporary. As such all options regarding higher rates this year remain open. As investors expected a more dovish assessment the greenback has been correcting higher.

Looking ahead, we stick to the view that the Fed will consider higher rates in September this year, especially as inflation expectations have remained well supported regardless of weaker growth momentum.

This in turn suggests there is limited room of falling central bank rate expectations, what should keep USD downside limited from the current levels.

As a result to the above outlined conditions we remain of the view that USD dips should be bought, for instance against the CHF. We remain long the cross.

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