TD Securities Senior Strategist Issa Commented on the Dollar

TD Securities Senior Strategist Issa noted that the dollar's sensitivity to interest rate hikes has decreased. Stating that its sensitivity to interest rate cuts has increased, he said, "This shows that the upward pressure on the dollar may begin to decrease."

TD Securities Senior Strategist Mazen Issa noted that the dollar's correlation profile has changed since the markets started to price the dovish rhetoric of the US Federal Reserve in October, and it has become more important to follow the Fed's easing cycle. "We have identified a change in the dynamics of the dollar. The focus is now on the journey rather than the destination. This suggests that the dollar rally may be behind us." Fed swaps priced in a 75 basis point hike in the policy rate after the November meeting, while markets were divided between a 50 and 75 basis point rate hike in December. Markets expect the terminal rate to be about 5 percent by mid-2023 and rate cuts to begin at the end of next year.

Expectations for a decline in the dollar

RBC Capital Markets Strategist Daria Parkhomenko noted that Powell's dovish tone this evening may cause a downward movement in the dollar. TD Securities Strategist Issa stated that Fed rates are likely to remain high for a while and the US interest rate differential will continue to be supportive for the dollar. He stated that the dollar will lose strength when other currencies begin to strengthen with their own internal dynamics. "A little more patience is needed for a return in the dollar," the expert said. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!