The US Dollar (USD) recovered in New York after earlier losses in Europe, supported by safe-haven flows amid broad risk-off conditions, ING's FX analyst Francesco Pesole notes.
Dollar expensive vs. G10 short-term rates
"The dollar came under pressure yesterday during European hours but recovered during New York’s session, potentially thanks to some safe haven flows abandoning high-beta currencies. Admittedly, the current market environment – bonds and risky assets both falling – isn’t giving clear-cut indications for FX. Some risk stabilization is likely needed to bring the dollar lower, which remains our call for this week."
"The dollar remains expensive relative to its short-term rate differentials across most of the G10. Yesterday’s ISM manufacturing didn’t move pricing for a December cut as expected: prices paid were a bit higher than expected, but the headline index print was soft. We expect that the remainder of the week will validate the market’s dovish pricing for next week’s Fed meeting."
