USD to recover after unusual correction – MUFG

The US Dollar Index (DXY) performance yesterday was the worst on the day of the Consumer Price Index (CPI) release so far this year. But in the view of economists at MUFG Bank, the USD sell-off is likely a temporary correction.

USD-bullish bias to be intact over the coming months

“Our sense at this stage is to view the US dollar sell-off as an unusual anomaly rather than a sign of any turning point.”

“The scale of US dollar strength is becoming stretched but with equity markets more likely to reverse yesterday bounce we maintain our USD-bullish bias which we expect to be intact over the coming months.”

“News from China of extended lockdowns reinforces the prospect of continued challenging global growth prospects that is consistent with renewed US dollar strength.”