USD: What’s Behind The Bounce; What’s The Trade? – Credit Agricole

Credit Agricole CIB FX Strategy Research argues that as the markets have been predominantly focused on the current inflation data and appear to be pricing in an overly cautious Fed, there is a room for the US yields and the USD to rebound further as these Fed expectations are at least partly reversed.

"Granted, US political risks remain pertinent as headlines from the Russia investigation are an ongoing source of vulnerability for the USD," CACIB adds.

Against this backdrop, CACIB sees the USD potentially recovering some ground against the CAD, and against the EUR.

In line with this view, CACIB maintains a long USD/CAD* exposure via buying the recent dip from 1.3190.

Source: Credit Agricole CIB ResearchOriginal Article