USD losses are steadying but major headwinds remain, economists at Scotiabank report.
December is typically a weak month for the USD
The big Dollar has recovered some ground overall so far today, reflecting modestly higher US Treasury yields and weaker Eurozone data. That does not mean there is much scope for a significant USD recovery, however.
Broader trends remain bearish and December is typically a weak month for the USD broadly (average return of around -0.9% in the December month over the last 25 years).
Supposedly USD-negative month-end rebalancing flows have yet to show up but US data reports today may refresh USD-bearishness. Data are expected to reflect a softening labour market (rising claims), slower spending and weaker core inflation via the PCE deflator (3.5% YoY expected versus 3.7% in September).
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