Historical analysis: Don’t sell the USD before the Fed has finished its rise – Crédit Agricole

Credit Agricole CIB Research warns against selling the USD before the official end of the current Fed hike cycle.

“Recent banking sector turmoil fueled concerns about aggressively tightening credit conditions and heightened recession risks in the United States. It also forced the Fed to hike dovish rates in March, seen as by many as heralding the end of its tightening cycle in May,” notes the CACIB.

Our recent historical analysis of FX price action over the past six cycles of Fed tightening since 1980 suggested that investors should not sell the USD until the Fed has effectively completed its hike. Indeed, it looks like the combination of ongoing Fed hikes and heightened recessionary risks tended to offer the USD a moderate boost on average.“adds CACIB.

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