BNY’s Geoff Yu notes that the Dollar is firming ahead of the FOMC as iFlow data show it increasingly driven by rate expectations rather than safe-haven demand. Clients are net sellers of the Canadian Dollar and Australian Dollar, while some North Asian currencies still attract buyers. The report suggests this pattern is likely to persist until markets adopt a different Federal Reserve narrative.

Rate expectations drive Dollar flows

"iFlow data shows the dollar is now driven by rate expectations rather than safe-haven demand, with net selling of CAD and AUD and only select North Asian currencies attracting buyers — a trend expected to continue until the market adopts a different Fed narrative."

"Dollar hedges continue to unwind across G10."

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