USD: Only Half A Smile But Still An Asymmetric Reaction Function

The USD has lost upward momentum as market participants reassess hawkish Federal Reserve expectations. The report anticipates an asymmetric FX reaction function where the USD is more sensitive to downside data surprises than positive ones.

Key Takeaways

• 1.The USD rally has lost momentum at the start of Q326 due to a reassessment of the hawkish Fed outlook.
• 2.USD price action is expected to remain asymmetric, with downside risks being more pronounced than potential gains from upside data surprises.

Table of Contents

• Asia overnight
• USD: only half a smile but still an asymmetric reaction function
• CAD: back to business as usual?
• Open trade recommendations
• Key events

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