The USD has been in demand in response to yesterday’s Fed monetary policy announcement.
This is regardless of the latest development being in line with expectations and although the Fed reiterated that inflation expectations will be cautiously watched. Most importantly, the central bank did not make a case of lowering rate expectations for the coming year while stressing that the pace of tightening will be data dependent.
From that angle there seems to be additional room of rising rate expectations to the benefit of the greenback, especially if inflation expectations start to pick up. This may be on the back of stabilizing commodity price developments or further improving domestic demand conditions.
Under the above outlined conditions we expect USD dips to remain a buy, for instance against the CHF.
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