DXY to maintain +IOF throughout 2023
FED (federal reserve)
US economy and the labour market is robust which is positive for the dollar however robust labour market and inflation have common relationship.
In order to combat inflation and bring down the price of goods and services FED adopted a rate hiking policy, this policy is fierce enough to tackle inflation but its a double edged sward that need to be handled carefully and efficiently. FED is much aware of the challenges of the policy they adopted but remain very committed to bringing down inflation to 2%
Nothing goes without a rule hence FED's 2023 terminal rate projection within this hiking cycle is 5.50% however with inflation remaining stubbornly high FED adjusted its terminal rate to peak 5.6/5.75% at the end of 2023
This adjustment indicates one more hike possibly 25BPS (basis points) is likely before 2023 comes to an end.
recent inflationary data readings showed that CPI rose 0.6% MoM and 3.7% YoY while core CPI remain 0.2% MoM and 4.3% YoY, its worth noting that FED combine different categories of data to determine the level of inflation in their economy but the two major categories used frequently is the PCE(personal consumption expenditure) and the CPI data
KEY FIGURES @ THE MOMENT
25BPS possibly November
GDP growth 2023 : 2.1%
Feds terminal rate 2024: 5.1
FEDS deflation target: 2%
inflation: 4.3%
DXY
DXY may be approaching a critical technical level relevant for retracement and possibly reversals but the key fundamental issues outlined above is most likely to limit its downward moves near term allowing it to maintain its strong move north at least till end of the year and should FED decide to be aggressive in their policies DXY is most likely to maintain its strong move north till the first three months of 2024 (first quarter).
October and November FOMC will be crucial to determine the direction of dollar near term and should FED commit to stringent policies DXY's over 20 years level broken last year will not be out of reach while 125.909 will be preparing to welcome price to its domain.
US economy and the labour market is robust which is positive for the dollar however robust labour market and inflation have common relationship.
In order to combat inflation and bring down the price of goods and services FED adopted a rate hiking policy, this policy is fierce enough to tackle inflation but its a double edged sward that need to be handled carefully and efficiently. FED is much aware of the challenges of the policy they adopted but remain very committed to bringing down inflation to 2%
Nothing goes without a rule hence FED's 2023 terminal rate projection within this hiking cycle is 5.50% however with inflation remaining stubbornly high FED adjusted its terminal rate to peak 5.6/5.75% at the end of 2023
This adjustment indicates one more hike possibly 25BPS (basis points) is likely before 2023 comes to an end.
recent inflationary data readings showed that CPI rose 0.6% MoM and 3.7% YoY while core CPI remain 0.2% MoM and 4.3% YoY, its worth noting that FED combine different categories of data to determine the level of inflation in their economy but the two major categories used frequently is the PCE(personal consumption expenditure) and the CPI data
KEY FIGURES @ THE MOMENT
25BPS possibly November
GDP growth 2023 : 2.1%
Feds terminal rate 2024: 5.1
FEDS deflation target: 2%
inflation: 4.3%
DXY
DXY may be approaching a critical technical level relevant for retracement and possibly reversals but the key fundamental issues outlined above is most likely to limit its downward moves near term allowing it to maintain its strong move north at least till end of the year and should FED decide to be aggressive in their policies DXY is most likely to maintain its strong move north till the first three months of 2024 (first quarter).
October and November FOMC will be crucial to determine the direction of dollar near term and should FED commit to stringent policies DXY's over 20 years level broken last year will not be out of reach while 125.909 will be preparing to welcome price to its domain.
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