Institutional Insights: Credit Agricole FX & Gold Views
According to Credit Agricole FX team 'The USD outlook has worsened recently due to growing market expectations of a Fed easing cycle starting in September, and concerns about the potential impact of a Donald Trump presidency on the USD. The USD may continue to face challenges as investors are still holding onto the currency and it is trading at a slight premium compared to fundamental FX drivers like UST yields and US rates.
However, we maintain a broadly constructive USD outlook for the second half of 2024. We believe that the US rates markets have priced in an overly dovish pivot by the Fed, a potential 'weak-USD doctrine' could boost the positive inflation impact of other planned Trump policies, FX investors may focus on the positive aspects of Trump's policy mix, and there could be increased demand for USD as a hedge against volatility spikes due to political and global geopolitical risks.
The market's expectations of a Fed rate cut will continue to influence the USD in the near term. We anticipate that the Fed will keep rates on hold in July and a September rate cut would be accompanied by data-dependent forward guidance without pre-commitment to further easing. The upcoming June core PCE print could confirm that US inflation remains stable, potentially correcting the overly dovish Fed market outlook and boosting the USD'
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!