Is the USD heading lower?
Weakening inflationary CPI readings pressuring the USD lower!!
Recent CPI data is showing that US inflation is easing and may have finally peaked giving some respite to the consumers bottom line. The US Federal Reserve has pointed to peak interest rates around 5.1% up from the previous estimate of 4.6%. This means that the rate rising cycle may continue through 2023 and easing after that with the Fed trying to engineer a ‘soft landing’ for the economy and steer clear of a dreaded (according to the media hype) recession.
What does this mean to the USD?
Well, the trade for a long time has been to be long US Dollars with the US rate rising cycle in full swing. Remembering that markets are always forward looking; with the end to interest rises in sight and major players stacked up long the USD, a decent unwind is on the cards.
I now expect that we have seen the top into USD and the potential for peak inflation which means that long term dollar bulls may be looking for an exit.
In the video below, I look at the USD and where I feel it is heading in the near term and longer term. I also look at Spot Gold and Copper and what their respective price action is telling us.
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