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It is prematurily . to visit a more structural dollar downtrend ING

An extension of support torisk assets kept the dollar under great pressure in the beginning of the week. The dollar correction may extend just a little further today as slowing US CPI may help risk sentiment further. However, in the opinion of economists at ING, it really is prematurily . to join the bearish dollar ship.

Another leg lower around CPI slowing?

Todays US CPI figures for August certainly are a risk event for the dollar. Overall, and given the recent hawkish messages by Fed Chair Jerome Powell, it seems unlikely that barring significantly below-consensus reads expectations around Fed tightening will undoubtedly be heavily suffering from todays CPI report. Having said that, there’s surely a chance a risk-on environment could be bolstered further by proof US inflation having peaked, and another leg reduced the dollar could be set off by another good session for global equities.

The narratives behind the recent FX moves aren’t solid enough for the strong bearish ask the dollar at this time. Optimism concerning the Ukraine conflict and lower gas prices could be misplaced or too premature, therefore the dollar may stabilise or recover later in the week.

SeeUSCPIPreview: Forecasts from 12 major banks, inflation begins to help ease

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