US Dollar: Gaining ground ahead of the Fed decision – ING

The US Dollar (USD) has opened the week on a strong note as AI sentiment stabilises, with a hawkish Federal Reserve backdrop and elevated energy prices providing further support, according to ING strategists Francesco Pesole, Chris Turner and Frantisek Taborsky. With US consumer confidence a key near-term driver, they anticipate broad support for the Dollar around the FOMC decision.

Can the Dollar retain support through FOMC week?

"The dollar has found good support early this week, as stabilising AI-related sentiment has allowed markets to reconnect with the broader supportive backdrop of a hawkish Federal Reserve and high energy prices."

"Pre-FOMC positioning may also be kicking in, with the forward-looking FX market viewing Chair Kevin Warsh's reiteration of inflation commitments as reinforcing the structural floor for the dollar. As discussed in our preview, we sympathise with this view and expect a broadly supported dollar this week."

"Today, the US calendar is rather busy. The highlight is the Conference Board consumer confidence index, which surprisingly plummeted to 81.9 in September. We expect an 81.5 print; consensus is 81.0."

"Surprises here aren’t likely to be enough to sway tomorrow’s Fed tone, but pricing for further tightening has shown some fragility of late, and evidence of deteriorating consumer mood could enter the equation. The other releases are all lower tier: September’s durable goods orders and new home sales, as well as the Richmond Fed manufacturing index."

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