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Dollar firms in risk-off trade as DXY holds near 100.5 support

Scotiabank analysts said OIS pricing for a Fed hike by year-end looks too rich, which they expect to weigh on the dollar as swaps reprice.

Reported · Written up by our desk · Major Pairs

Scotiabank analysts Shaun Osborne and Eric Theoret said the US dollar has been broadly firmer in a risk-off swing, with equities weaker and oil higher. They noted the US Dollar Index, DXY, has stalled around 100.5 support after drifting down from late June highs.

The note said late-week price action still leaves open the risk of a bearish weekly close for the DXY. It added that the index could face more losses unless it is able to rally significantly over the remaining session.

Scotiabank also pointed to rates markets, arguing that OIS pricing for a Fed hike by year-end is too rich. The analysts said the dollar should ease as the swaps curve reprices.

Latest closeDollar index 100.71 ▲0.2%

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