Forex

USDOLLAR benefits from higher yield as risk-off sentiment prevails

Russell Shor Written by Russell Shor
  • USDOLLAR
    (${instrument.percentChange}%)


Source: www.tradingview.com

Heading towards the Fed release on Wednesday a sense of caution prevails. Despite the market looking for a pivot, the Fed has maintained an aggressive stance.

Since 23 January, the US 10-year real rate has appreciated. The market will look carefully at the communication from tomorrow's release.

Risk assets are risk-off with the higher yields. Money has moved back into the dollar. FXCM's USDOLLAR basket has benefitted, having a correlation coefficient of 62%, against the real rate.

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A hawkish Fed will see capital rotate into the dollar, as safety is sought. However, if the Fed shows hints of relenting, the dollar is a likely target for shorts.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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