Staff Writer
According to Kathy Jones, a strategist at Charles Schwab, the US dollar will likely remain at present levels until the Federal Reserve starts to suggest that it is switching from raising rates to decreasing them.
Jones, the company’s top fixed-income strategist, said that until the Fed really announces a tipping point, it is difficult to predict when the dollar will change.
The Fed’s meeting will end later on Wednesday, and the markets are preparing for what could be the final rate hike of this cycle.
Investors will be waiting for Chair Jerome Powell to indicate whether or not there will be another raise this year and how long the rate may stay high. The judgment will be followed by a speech from him.
The derivatives markets are factoring in expectations that, even though the economy has remained resilient, rates will start to decline early next year as growth slows.
Jones stated, “A modest recession is already factored in. The most recent numbers truly haven’t persuaded me that we won’t see it.
The anticipation that the Fed is almost finished has caused the dollar to decline after it saw a significant rally in 2022 as a result of rate hikes by the Fed. The euro appreciated more than 3% against the dollar this year, and the pound gained over 7%, while the Bloomberg Dollar Spot Index decreased by about 3%.
According to her, the European Central Bank may end its cycle of rate hikes “sooner than they would like to admit,” but it is unclear what the Bank of England will do.
She noted that this cycle “has been one of the more unpredictable cycles I’ve seen in many years.”
