📝 Late Stage Flatter Yield Curves Means Dollar Bid: ING FX Strategy

We expect the Fed to deliver at least another 175bp of hikes this year as the Fed drives real US interest rates into restrictive territory. This is not good news for global growth –but that is the point, the Fed needs to slow demand. Flatter yield curves consistent with the latter stages of the US business cycle are normally good news for the dollar.In all this means that the dollar should stay bid this summer (1.00/1.02 is possible in EUR/USD), while USD/JPY in the 135/140 region looks ready to trigger Japanese intervention. GBP/USD can move to the low 1.20s as the BoE cycle is repriced lower and the CHF should start to outperform in Europe as the SNB guides it higher. - ING FX Strategy