US Dollar Rate Talking Points
Fresh data prints coming out of the US economy may do little to heighten the appeal of the Dollar as the Federal Open Market Committee (FOMC) alters the forward guidance for monetary policy.
Fundamental Forecast for US Dollar: Bearish
The US Dollar[1] struggles to hold its ground as the Federal Reserve[2] largely abandons the wait-and-see approach for monetary policy, and the central bank may continue to change its tune over the coming months as “many FOMC[3] participants now see that the case for somewhat more accommodative policy has strengthened.”
The US Durable Goods Orders report may reinforce speculation for an imminent Fed rate cut as demand for large-ticket items are expected to hold flat in May, and the final revision to the US Gross Domestic Product (GDP) report may offer the USD[4] little relief as the update is anticipated to show a minor upward revision in the growth rate.
Even though the economy shows little signs of a looming recession, it seems as though FOMC has become less data dependent and more responsive to the shift in US trade policy as the Trump administration relies on tariffs to push its agenda.
As a result, the FOMC appears to be on track to switch gears over the coming months, and a growing number of Fed officials may show a greater willingness to insulate the economy as the “apparent progress on trade turned to greater uncertainty.”
It remains to be seen if the central bank will implement a rate easing cycle
