AN UNFAVOURABLE MIX FOR US DOLLAR PERFORMANCE – MUFG

The US Dollar has continued to trade at stronger levels after staging a strong rebound on Thursday. Economists at MUFG Bank analyze USD outlook.

Slowing inflation should give the Fed more confidence that rates are now sufficiently restrictive

Slowing inflation should give the Fed more confidence that rates are now sufficiently restrictive, and if inflation continues to fall closer to the Fed’s inflation target it will begin to open up room for the Fed to begin to lower rates next year. 

The combination of lower US rates in response to slowing US inflation and a softer landing for the US economy should be an unfavourable mix for US Dollar performance.