USD constrained by a dovish Fed and weak growth – TDS

Analysts from TDS noted the USD is constrained by a dovish Fed and lacklustre growth but they expect to see selective gains against G-10 counterparts later this year.

Key Quotes:

“A dovish Fed keeps the USD on its back foot a s market focus remains on idiosyncratic risks elsewhere. A return of better growth prospects will put the focus back on (moderate) USD strength as the Fed comes back in play later this year.”

Following a stumble a t the end of 2015, growth momentum has regained its footing. Despite the improvement in growth, however, global headwinds have continued to restrain the Fed, which delivered a dovish message at the March FOMC meeting, forcing the market’s pricing for a June rate hike to decline to 50%.

“The dovish March FOMC caught many investors by surprise, but strong data could leave the Fed on track for a June rate hike. While the Fed’s dovish tone may keep the curve steeper in the near-term, the gravitational tug from low global yields should continue to support the long end.”

Analysts from TDS noted the USD is constrained by a dovish Fed and lacklustre growth but they expect to see selective gains against G-10 counterparts later this year.

(Market News Provided by FXstreet)