USD maintains a firm tone – Scotiabank

The US dollar (USD) remains firm, notes Shaun Osborne, chief FX strategist at Scotiabank.

USD remains firm, holding close to recent highs

“The DXY hit a new marginal high – above Friday’s peak – a little earlier today before relaxing, but it’s yet another case of the market outlook for revised rates and firmer market-driven rates providing key support for a firm , and maybe even more firmly. dollar as a whole. Risk sentiment is a little soft today as Chinese stocks falter on fading stimulus hopes. US equity futures are lower on rates and regulatory concerns.”

“DXY is trading close to estimated fair value (based on index-weighted 2Y spreads), which may suggest limited scope for further gains absent further change in yields or spreads. But seasonality is positive for DXY in October and November, and technical indications still suggest the possibility of DXY recovering more from the H2 decline (toward the potential 103/104 range).

“It’s another easy calendar risk day. US data points are limited to wholesale inventories and FOMC minutes – which may seem a little convenient, but which have likely been overtaken by recent events. There is a reopening of 10-year bonds and some more commentary from Fed speakers during the session (Bostic, Jefferson and Daly are the voters among them).