However, during the morning, the euro, pound and yen trimmed losses and rallied to trade flat on the day, leaving the dollar index at 106.65. T. Rowe Price’s Thomas Poullaouec said he expects the dollar to “keep smiling.”
“The ‘dollar smile’ theory holds that the currency performs well at each end of the global growth continuum, benefiting when relative US growth and interest rates are higher, as well as being a ‘safe haven’. ‘ when global growth falters, which it is,” he said in emailed comments.
“Right now, it looks like the only thing that could hold the dollar back is a Fed pivot, which would likely only come amid signs of much weaker US growth or further evidence of receding inflation. For now it looks like the dollar will continue to smile,” he added.
Fed officials saw “little indication” late last month that inflationary pressures in the United States are easing, according to minutes released the day before. They signaled a possible slowing in the rate of hikes, but not a shift to cuts in 2023, as traders had discounted until recently.
Source: Ambito
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