The US Dollar (DX=F) is rising this morning on the back of a hotter-than-expected CPI print. Rabobank Head of FX Strategy Jane Foley joins Yahoo Finance to discuss why the rate cut doubts combined with certain political risks could suggest that the stronger-for-longer US Dollar could remain.
Foley explains that the US economy is more resilient than other major economies, particularly compared to China, and that interest rate differentials are favoring the Dollar. Geopolitical concerns could also “create some safe haven bid” for the Dollar. The strategist also signals that a potential Trump presidency could impose tariffs with an inflationary effect, sustaining a stronger-for-longer US Dollar.
On the Fed’s monetary policy, Foley explains that it is quite difficult to suggest that the Fed should be cutting three times this year. Within the FX space, for the Fed to cut in November Foley indicates a need for more data, but adds that the timing would be “politically difficult” given the election. “If the economic data isn’t weak enough by September, maybe [the Fed] won’t be able to go until after the election,” Foley states.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Gabriel Roy
