The USD’s status as a safe haven is not straightforward and is currently being complicated by various aspects connected with the reflation trade. In the coming months, economists at Rabobank expect the direction of yields and in particular real yields to set the tone for the USD.
“Today the market will be focussed on the US PPI inflation print as well as on the comments from Fed officials. Another round of reassurances that inflation is transient could lead to a modestly softer USD near-term.”
“Given that the reflation debate will remain in centre stage in the coming months, there is plenty of reason to suspect scope for volatility for the USD and pockets of support on the back of inflation related uncertainty in the coming months.”
“The 100-day SMA is likely to offer some resistance to the DXY dollar index in the 91.08 area.”
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