Dollar strength to last until early 2023.

FX markets have entered a consolidative phase. That has allowed the Dollar to correct 3-4% lower. Yet, economists at ING still feel it is too soon to call a major turn in the Dollar.

When will asset markets turn?

“Over the next couple of months, the direction of travel for US real yields is higher still. A 2.00% level on the US 10-year real yield is entirely possible as the Fed takes the policy rate towards 5.00%, dragging long-end yields with it. That should keep the Dollar bid across the board.”

“The turn in global bond markets should provide the first real opportunity for money to be put back to work in asset markets – potentially at the expense of the Dollar. Our base case, however, is that this is not a story until early 2023. Before then, we see EUR/USD staying under pressure this winter. Sub-0.95 levels are possible.”

“Japan’s campaign to slow the USD/JPY advance should not prevent further forays over 150. And GBP/USD can easily trade at sub 1.10 levels as the tight fiscal and less hawkish monetary policy wins through in a still difficult external environment.”

EURUSD recovers to 0.9950 as risk flows return

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GBPUSD bounces towards 1.1350 as USD recovery fizzles

GBPUSD is bouncing back towards 1.1350, consolidating the biggest daily gains in a month. UK FinMin Hunt eyes GBP60 billion worth of tax hike and spending cuts in the Budget. Mixed US data and Fedspeak allow buyers to sneak in amid a quiet start to the week. 


Gold steadies below $1,682 hurdle as DXY eases ahead of US inflation

Gold price treads water after a downside start to the key week. US dollar fails to cheer China-linked risk aversion amid indecision over Fed’s next move. US inflation data, Fedspeak will be crucial for near-term XAUUSD directions as pivot talks amplify.

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