TD Research discusses the USD outlook this week.
"Short-term drivers imply flat USD positioning and a nice discount. Our positioning indicator, PIT, has moved about a full standard deviation, bringing the USD to neutral levels (HFFV has the USD at a nice discount). At the same time, the calendar and event risk favors a USD bounce through this week that should carry through 2023," TD notes.
"While Fed speak could offer a mixed tone, Powell should emphasize the need for a higher terminal rate. That message, coupled with our expectations of a solid week of US data, favors consolidation. While month-end models point to USD downside, China's COVID situation could pose a near-term challenge to perky risk markets," TD adds.