TD Securities strategists expect the U.S. dollar to remain supported into the Federal Reserve’s Oct. 27–28 meeting, but see a post-election pullback as more likely after Nov. 3, FXStreet reported.
The calendar places the Federal Open Market Committee’s next meeting before the federal election. At its Sept. 16 meeting, the committee voted 12-0 to raise the federal funds target range by 25 basis points, to 3.75%–4.00%. Minutes said most participants considered another increase by year-end likely to be appropriate. They also said future policy decisions would depend on incoming information.
FXStreet reported that the strategists put aggregate foreign-exchange positioning at +1 z-score, or one standard deviation above its historical reference point. They also ranked the United States highest among Group of 10 economies for pressure to raise interest rates. The report did not identify the positioning series or comparison period, and gave no measure for the cross-country rate-pressure ranking.
The Commodity Futures Trading Commission says its Commitments of Traders reports cover positions in reportable futures and options markets. The reports generally reflect positions from the preceding Tuesday and are released Friday at 3:30 p.m. ET. FXStreet did not identify that series as the basis for the aggregate positioning figure.
For the post-election outlook, FXStreet reported that the strategists see easing uncertainty after voters cast ballots and year-end seasonal patterns as potential sources of dollar weakness. They also cited the possibility that concerns about AI-related growth could leave U.S. stocks trailing foreign markets, along with lower U.S. real yields.
FXStreet said the strategists drew a historical comparison with the dollar’s rise ahead of the 2018 midterm elections. The report cited that episode alongside the other factors in their outlook. The Fed meeting is scheduled for Oct. 27–28, followed by the Nov. 3 election.
