DXY update: remains in range for seven weeks
Yesterdays' release of the US' FOMC meeting minutes came as expected with a few curve balls. I noted that a few FED members favor balance sheet runoffs as in lieu of raising rates However a faster taper and three interest rate hikes are still expected in 2022 and this adds more support to stronger DXY.
However, the US Dollar is expected to remain under pressure in 2022 as US bonds struggle under higher yield expectations. Basically, historically, there's a positive correlation between the US Dollar and US bonds. US bonds on the other hand have a negative correlation with US bond yields. US yields have been rising aggressively in the past few weeks hence bonds sold off. This kind off explains why the US dollar has been in range despite data showing that bets by non-commercial traders that the currency has a lot to gain are at their highest in months.
Omicron remains a key risk factor in the global markets
However, the US Dollar is expected to remain under pressure in 2022 as US bonds struggle under higher yield expectations. Basically, historically, there's a positive correlation between the US Dollar and US bonds. US bonds on the other hand have a negative correlation with US bond yields. US yields have been rising aggressively in the past few weeks hence bonds sold off. This kind off explains why the US dollar has been in range despite data showing that bets by non-commercial traders that the currency has a lot to gain are at their highest in months.
Omicron remains a key risk factor in the global markets
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