Another bad week for the Dollar – Commerzbank

Fed policy announcements are unlikely to be helpful for the US Dollar, according to economists at Commerzbank. 

“In case of a surprise in connection with the CPI data tomorrow, the Euro might show some flickering moves but in the end, the focus will be on the ECB’s assessment and its comments. Only the ECB should be able to provide cause for a re-valuation of the EUR really if its comments were to change significantly – something we do not currently expect. At the same time, that means that for now there is no reason for a significantly weaker Euro either, although there is already much priced into the EUR.”

“The Dollar might get into trouble if the Fed sounds more moderate regarding wage growth and inflation tomorrow evening, as the market is then likely to become even more set on its rate cut expectations.”

“Everything all told a lot, therefore, points towards this week becoming yet another bad one for the Dollar – unless the Fed sounds surprisingly hawkish to the market.”