A dovish Fed exacerbated month-end dynamics that favor USD weakness. Beyond this very short window however, analysts at TD Securities see this move on limited legs.
Key quotes
“The Fed was considerably dovish and only served to exacerbate month-end dynamics that favor USD weakness. The tone is not a surprise but we thought the acknowledgment that there are big risks over the ‘medium-term’ is a strong indication that policymakers believe that the shape of the recovery is anything but a V.”
“We still believe that the USD is best positioned to weather the ‘considerable risks’ over the medium-term. While we are sympathetic to the notion that exorbitant liquidity measures could be a catalyst for USD weakness, this argument is largely antiquated. We are in a highly dollarized world, even more so than 2008.”
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