The firm's senior emerging market strategist, Mitul Kotecha, spoke to Bloomberg earlier today
- Data outside of the US still looks pretty weak
- Central banks globally have become increasingly dovish
- Although Fed is dovish, markets have priced in that sense of dovishness
- Doesn't expect any change in policy in this week's Fed meeting
- Even if Powell sounds more dovish, it isn't going to derail the run in the dollar
- Difficult to short the dollar since it offers the highest carry among G10 currencies
Do be reminded that the Fed will be meeting again later this week in what will be a key risk event for the greenback in the coming days. As it stands, despite the slight pullback seen on Friday after the muddy details of the US Q1 GDP report, the dollar still sits in a relatively comfortable position considering the worries seen elsewhere around the globe.
Until some other major currency steps up and offers some different kind of attractiveness, the dollar remains the best of a bad bunch in my view still. I still believe that it is more than likely things will only start shifting in the second half of the year when the global growth slowdown is more pronounced and waning economic conditions in the US may force the Fed to err towards rate cuts instead.
