The solid NFP report seemed to have cemented the rate hike for the Federal Reserve.
So how far can the US dollar go from here? The team at Credit Agricole examines:
Here is their view, courtesy of eFXnews:
The USD rally has reached a point where some are starting to question the scope for any significant further upside given that policy divergence seems largely in the price.
Indeed, with a December lift-off widely expected by now, the Fed continues to sound quite cautious on the pace of future tightening.
Next week’s retail sales data release could boost or restrict the Fed’s ability to produce hawkish surprises from here. Indeed, it seems that tightening US financial conditions (reflected in the growing US FCI) and a string of disappointing US data (reflected in the negative US ESI) formed the backdrop of the dovish March and September Fed meetings. The Fed may face a similar backdrop ahead of the December policy meeting especially if retail sales adds to the string of disappointing US data.
USD could struggle to extend its recent gains as a result.Â
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