Downhill for the US Dollar in 2023 – CIBC
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With the Fed set to undershoot market expectations for the peak fed funds rate, and attention turning to policy tightening in other advanced economies, economists at CIBC Capital Markets look for the USD to weaken in 2023.
“We see some modest upside in the USD from potential data surprises that might tilt market pricing for Fed rate hikes at the margin. However, we’d look past that as the upcoming ‘step down’ to 25 bps hikes has been telegraphed by the market for now.”
“The USD should continue to come under pressure in the quarters ahead as the protracted showdown over the debt ceiling leads to an increased premium on USD valuation.”
“When layered with a much better backdrop outside of North America, this year is shaping up to be a difficult one for USD bulls.”
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