Credit Agricole CIB Research discusses the USD outlook ahead of tomorrow's US CPI print for the month of January.
"We continue to think that the USD will not benefit as much from a further of its relative rate appeal from here. This also makes us bullish the USD only vs the G10 currencies that are sensitive to US rate moves like the CHF and JPY. In the near term, the USD can also benefit from its role as a safe haven in the event that tighter US and global financial conditions undermine risk sentiment," CACIB notes.
"Tomorrow, FX investors will focus on the US CPI data for January. Ahead of the data, we expect US inflation to accelerate further but not to exceed the already lofty market expectations. With many positives in the price of the USD by now, it would take fairly positive inflation surprises and hawkish Fed signals to revive the USD rally," CACIB adds.
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