ING Says Dollar to Take Cue from Oil Prices If Fed Holds Rate
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Author of the article:You can save this article by registering for freehere. Orsign-inif you have an account. ph9))gj95cp4b48k{x80aydu_media_dl_1. pngBloomberg(Bloomberg) — The dollar will come under pressure and follow oil prices down if the Federal Reserve keeps interest rates unchanged on Wednesday, according to ING. Subscribe now to read the latest news in your city and across Canada. Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. Daily content from Financial Times, the world's leading global business publication. Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. Subscribe now to read the latest news in your city and across Canada. 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Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe Bloomberg’s dollar gauge was trading down less than 0. 1% on Wednesday, a fourth session where it was nearly unchanged and seemed immune to recent volatility in oil prices. The 60-day rolling correlation between the Bloomberg Dollar Spot Index and Brent crude oil future prices on Wednesday slipped to its lowest level since late March. “That resilience will be tested heavily today,” wrote Francesco Pesole, a strategist at ING. “A Fed hold should trigger an unwinding of precautionary dollar positioning, allowing the dollar to reconnect with the signal from lower oil prices. ”Get the latest headlines, breaking news and columns. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Top Stories will soon be in your inbox. We encountered an issue signing you up. Please try againTraders have grown bullish on the dollar this year, becoming the most upbeat on the US currency since 2015, according to Commodity Futures Trading Commission data. The US attack on Iran disrupted global energy flows and led to a rally in oil prices, sparking global concerns about runaway inflation. Although oil prices have fluctuated with developments in the six-months long war, markets are expecting the Fed to react and are fully pricing in a hike in September. The swaps market expects the Fed to leave rates unchanged Wednesday, though it is pricing in a roughly 34% chance of a hike. TD Securities has also warned of a dollar drop if the Fed keeps rates unchanged, but said the scale of the decline will depend on the number of FOMC members who vote in favor of holding steady. Fed Governor Kevin Warsh, who took helm in May, has stepped back from signaling Fed rate intentions well in advance. “In other words, unless Fed Chair Kevin Warsh surprises with a hawkish spin, or we see more than two dissenters, we think the dollar will come under pressure today,” said ING’s Pesole. —With assistance from Carter Johnson. Join the ConversationThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more aboutcookies here. By continuing to use our site, you agree to ourTerms of UseandPrivacy Policy.