Dollar Strength to Moderate as Markets Reassess Fed Policy

Thu Lan Nguyen from Commerzbank argues that the US Dollar's current support from perceived hawkish Federal Reserve policy will soon fade as markets reassess United States rate expectations over coming quarters.

The dollar is currently benefiting from a Fed that markets perceive as relatively hawkish, but this narrative has shown signs of cracking since the July FOMC meeting. Despite this, markets still price in further US rate hikes.

However, Commerzbank believes these expectations are overly optimistic and expects a reassessment of the rate outlook over the coming quarters, which should weigh on the dollar.