The Dollar is entering the FOMC decision on a weak note, with no signs of panic selling despite recent commentary from President Trump. There has been a marginal net-buying trend over the past three months, although signs of deterioration have emerged. Bob Savage, BNY's Head of Markets Macro Strategy, notes that the Dollar is in a better position than before the last FOMC decision, but overall hedges remain elevated.

Dollar shows signs of weakness

"The dollar is heading into the FOMC decision on a soft note but, notwithstanding President Trump’s dollar commentary yesterday, there are no signs of panic selling yet."

"On a holdings basis, the dollar is in a much better position than it was in the run-up to the December FOMC decision, though overall hedges are still above the rolling 12-month average."

"However, the flow magnitudes are also not enough to suggest that cross-border investors have a major 'sell U.S.' trade in place; at most there is a prevailing 'hedge the dollar' view, but without much conviction."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)