US Dollar: Fed risks and election scenarios – TD Securities
TD Securities’ macro team, led by Jayati Bharadwaj, Howard Du and Linda Cheng, maintains a bearish view on the Dollar despite a hawkish market reaction to Chair Warsh’s Jackson Hole speech.
TD Securities' macro team anticipates a bearish trend for the US Dollar, despite Chair Jerome H. Warsh's hawkish remarks during the Jackson Hole speech. The analysts believe that incoming US data will likely lead to a September Fed hold decision, with weaker overall USD performance heading into year-end. The team suggests that USD rallies against currencies such as the Swedish Krona (SEK), Australian Dollar (AUD), Mexican Peso (MXN), and South African Rand (ZAR) are likely to be short-lived without significant policy changes and positive economic surprises.
As attention turns to the US midterm elections after Labor Day, the USD is expected to trade moderately weaker to neutral in a gridlocked political environment. However, a Blue Wave outcome could result in a more pronounced USD rally, bolstering US credibility and reducing long-dated Treasury term premium. The analysts believe that a divided Congress, as seen in the 2018 election, would be the most bearish scenario for the USD, recommending lower USD/SEK, USD/CNH, and higher USD/EUR.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
