USD Keeps Its Cool Amid “US Exceptionalism” Craze
Morning rates for the dollar stay pretty much flat after a few winning days. The U.S. currency is still riding its “exceptionalism” narrative, with investors eyeing a potential Fed policy shift—though the March cut isn’t in full swing yet. The market is now saying there’s only a 17 % chance that a rate cut will happen in March. The first 25‑basis‑point drop in the cycle is still looking around the June meeting.
Why The Dollar Isn’t Dropping
- Robust jobs report last Friday sent the Fed’s hawk wings out of themselves.
- Yesterday’s ISM services PMI beat expectations, giving the dollar a boost.
- Today’s agenda—packed with Fed speakers—is anticipated to keep the greenback on a stable footing.
Whichever Way The Market Goes, the Dollar’s Naming a “Path of Least Resistance”
With this week’s data docket staying rock‑steady, the USD is likely to pretend it’s a gentle slide up for now.
Meanwhile, the euro is feeling the muscle of a stronger USD, trading near its lowest since mid‑December. The eurozone’s outlook looks pretty grim, even with Germany’s factory orders data being nice—but still skewed. The pound isn’t getting any better either; although it’s a touch softer than yesterday, the currency has dipped below the 200‑day moving average for the first time since last November. The markets are shrugging off a better‑than‑expected January PMI and ignoring BoE Chief Economist Pill’s remarks.
Short‑Term Outlook for GBP
The pound’s risk profile remains tilted to the downside, mainly because of the bullish dollar action, not so much due to domestic issues.
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