Monex’s September 2024 FX Forecasts

While our expectations had been for relatively quiet summer holidays, a renewed focus on both sides of the Fed’s dual mandate, combined with an unwinding of yen carry trades, saw a notable spike in FX volatility to start last month. The result was a sharp dollar selloff, followed by a continued grind lower for the greenback. Between August 1st and August 27th, the DXY index shed almost 3.5%. While a turnaround towards month-end saw the greenback claw back some losses, last month’s price action still leaves the broad dollar trading somewhat weaker than we think is justified by fundamentals.

In our view, there is a risk of overinterpreting the dollar’s slide through August’s muted trading conditions. Similar selloffs were a feature of both the prior summer and Christmas periods. Neither stuck. Granted, September should still bring with it the first Fed cut of this cycle, but only by 25bps – market expectations for Fed easing continue to look overly aggressive in our eyes. Accompanied by traders returning to the office, and assuming that there are no major downside surprises in the August jobs report, we think this sets the scene for a reassessment of cross-asset pricing and a greenback recovery in September.

You can read our September 2024 FX Forecasts report here:

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Authors:

Nick Rees, FX Market Analyst

María Marcos, FX Market Analyst

Disclaimer

This information has been prepared by Monex Europe Holdings Limited, part of Monex S.A.P.I. de C.V. (“Monex”). The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. All entities in the “Monex” group of companies are regulated for different products and services within the jurisdictions in which they operate. Details of the different entities can be found here. Details of the respective entities’ regulated status and available products and services can then be found on the relevant links to the individual jurisdictions’ website.