US Dollar Gains Slow Down Ahead of FOMC Meeting
US Dollar gains have slowed down as US yields retreat and risk appetite improves after a tech-led selloff, according to Scotiabank strategists Shaun Osborne and Eric Theoret.
High-beta currencies are outperforming the major ones against the USD, while the EUR and GBP are modestly firmer but failing to leverage positive domestic data surprises into meaningful outperformance.
The US Dollar and US yields remain relatively supported due to geopolitical tensions around Iran and the upcoming Federal Open Market Committee (FOMC) meeting next week.
US yields have edged back from yesterday's peaks, while swaps pricing has nudged back a little from yesterday's peak but OIS still indicate a not insignificant risk of a Fed hike next week with 7bps of tightening priced in.