Usd To Remain Under Pressure Bbh

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Usd To Remain Under Pressure Bbh

Us Dollar To Remain Under Pressure In Short-Term - Bbh

According to Forex analysts from BBH, the US Dollar will likely remain on the defensive in the short term. The one currency against which the US Dollar will underpin the most is the Japanese Yen.

In simple words, we can expect the USD/JPY to stay on the defensive in the next few weeks. Additionally, the BBH analysts also pointed out that the future contract of US equities is trending higher while the US bond yields show a slight inversion.

Us Stocks Trend Higher

Normally, a stronger US Dollar means lower prices of the US stocks and vice versa. As the US stocks are turning higher, we can expect the US Dollar to turn weak. All of this is happening at a time when the inflation rate continues to turn lower every month while the jobs market has started to show signs of weakness.

Amidst all of this, the USD will remain depressed in the short term against all the major currencies, such as JPY, EUR, and GBP.

Furthermore, the forecasts for the Fed funds rate also show some divergence from the dot plot of the FOMC. So, that's yet another reason why the USD will remain under pressure.

By December 2024, a rate cut of 60 bps (0.60%) is being priced in by the Fed funds futures. However, the FOMC has only plans for around 25 bps worth of rate cuts in 2024.

If we look at the divergence, there's a big difference between what the FOMC is thinking and what the market is expecting. In General, some weakness is expected given that the Fed is shifting from a hawkish phase to a dovish phase.

While this change will not be good for the US Dollar, it will drive growth in the US economy and will also strengthen the labor market. Additionally, a decline in the jobless rate will also be followed by the Federal Reserve rate cuts.

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