Francesco Pesole, Frantisek Taborsky and Chris Turner at ING said the dollar could surrender some gains if concern over AI-related share losses fades, putting Tuesday’s U.S. inflation report in focus for December rate expectations.
ING’s analysis centers on investor caution: AI-related selling reached defensive equities in the United States and other markets, adding to dollar demand. The bank said the currency was strengthening before Friday’s jobs release. Its strategists said easing broader risk aversion could leave the dollar exposed to a pullback, while continued caution might sustain support.
The strategists described the possibility of a pullback as “some moderate correction risk.” ING also said lower short-term U.S. rates could weigh on the dollar, with persistent risk aversion acting as a source of support.
Before the October policy decision, ING said the perceived risk of an AI-related equity correction had eased somewhat. EconoTimes previously covered that assessment in its report on the Fed’s rate decision and two members’ preference for an increase.
The U.S. Bureau of Labor Statistics (BLS) reported Friday that nonfarm payroll employment increased by 165,000 in October. That was above the average monthly increase of 48,000 over the previous 12 months. The unemployment rate was 4.1%.
The Federal Open Market Committee (FOMC) held its target range at 3.75% to 4.00% on Oct. 28. Two FOMC members, Lisa D. Cook and Beth M. Hammack, preferred a quarter-point increase. ING’s Nov. 9 note estimated that market pricing implied 19 basis points of a December increase; that figure is the bank’s market estimate, not an official Fed forecast.
The BLS scheduled the October Consumer Price Index report for Tuesday, Nov. 10, at 8:30 a.m. ET. ING forecasts monthly increases of 0.3% in both headline and core inflation; those figures are forecasts, not released results. The Fed’s next scheduled meeting is Dec. 8-9.
