May 04, 2022 - 02:23 PM 246 views
The US dollar is on stable
footing as the Federal Reserve (Fed) prepares to increase interest rates.
According to ING economists, the dollar's "sell-the-fact" downside
risk seems to be limited.
Over the next few months, the balance
sheet will be expected to decrease.
believe the FOMC will offer a well-publicized price rise of 50 basis points,
with a 75 basis point hike begin completely out of the question at this time.
We anticipate today's announcement of quantitative tightening. We anticipate
the Fed to begin by allowing $50 billion to flow off each month, gradually
growing to $95 billion by September. All of these indicators should be
consistent with market expectations. That doesn't rule out the possibility of a
surprise on any side. "
likelihood of a dollar "sell-the-fact" response is not ruled out
completely. Still, we believe that the dollar faces minimal downside risks
today, as long as the Fed does not defy hawkish market sentiment and that any
negative response would be close to the end of its life. This is true in the
sense of the geopolitical risk in Europe stemming from the Ukraine conflict, lockdowns
in China, Chinese capital controls, and portfolio outflows from emerging