USD: Steady Fed policy in June could certainty knock the value lower - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, explains that the DXY dollar index is currently trading over 4% below its January high and at current levels, however, are still almost 2% above the November low. 

Key Quotes

“Since the victory of Trump in the US Presidential election last year, politics has been a strong driving force behind the USD.  Initially reflationary hopes lifted the greenback.  Since the President’s January inauguration, however, weak approval ratings and disappointments over the pace of key pieces of legislation through Congress have sapped some of the USD’s strength.”

“Hopes for a Trump-led reflation have been reduced since the start of the year and the USD has softened accordingly.  That said, a strengthening world growth has been an offsetting factor for market confidence.  Market expectations that the Fed is preparing the market for a rate hike in June have also been supportive for the USD.  That said, we are not convinced that the Fed will hike again next month.  Steady policy in June could certainty knock the value of the USD lower.”