Investing.com – The dollar edged up slightly on Wednesday and will remain king of the currency arena until U.S. “economic exceptionalism” cools, opening the door for the Federal Reserve to chart out a clearer path for rate cuts.
rose 0.15% to 105.66.
“Until the rest of the world begins to outperform the US and until the Fed sets a clearer horizon for when to begin easing policy, we continue to believe the currency will struggle to rise against the US dollar,” Macquarie said in a report. Wednesday note.
“US economic exceptionalism” remains the “dominant theme” in the currency market, Macquarie said, and urged the Federal Reserve to take a hawkish stance at a time when other central banks appear to be signaling rate cuts sooner rather than later.
The Fed continues to sound “much more hawkish than the ECB, the Bank of England, the Bank of Canada and the RBA,” Macquarie says, noting that Friday’s PCE price index and Thursday’s US GDP will be closely watched.
However, a rebound in the dollar’s path may not come until after the summer, with Macquarie warning that a combination of factors will be needed, including a further slowdown in inflation, slowing eurozone growth and easing geopolitical turmoil.
However, there are some signs that other economies are on the mend, as evidenced by the latest data1. Economic data from the UK and Europe surprised growth potential and helped yesterday’s recovery, but “a longer period of outperformance of the rest of the world will be required.” shake confidence in US economic exceptionalism.”
remove advertising
.