There are still solid grounds to expect the USD to weaken a little further – Scotiabank DollarIndex Fed SP500 Banks
The peak in the Fed rate cycle appears closer. Economists at Scotiabank analyze what happens when the US rate cycle peaks.Broader pressure on the USD is likely to develop as cyclical headwinds mount and markets begin to anticipate easier Fed policy settings. Fed rate cuts are unlikely before Q2 next year but we forecast relatively rapid rate cuts thereafter.
On average the DXY falls nearly 5% in the first six to seven months after the last Fed hike and is down nearly 3% on average a year after the last tightening. Equity markets typically react positively to the Fed rate cycle peak, rising some 12% in the first year after the last rate increase . If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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