Hawkish Fed cut could boost USD but hang on for loses later - Citi
Citi on today's Fed decision
Citi discusses the USD outlook around today's FOMC policy decision.
"Trade talks, not Fed outlook to drive dollar direction - the prospect of a "hawkish" Fed rate cut (ie. a 25bp cut but signaling maybe one more cut at best) may lead to some USD gains over the next 24 hours as US rates markets adjust to a less dovish outlook (from currently pricing 3 Fed cuts including the one likely tonight)," Citi notes.
"More fundamentally though, the bias remains for a weaker USD
though the path to sustained weakness lies with a resolution of the US -
China trade dispute, not with Fed rate cuts. Should a trade
deal be concluded in October, it could see a significant reversal in
current CNY/ CNH weakness likely to flow on to strength in other risk
currencies within G10 and EM (commodity bloc, Asia EM and even EUR),"
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