September could be the last of the outsized Fed hikes – JP Morgan

Analysts at JP Morgan appear sceptical over the US Dollar’s further upside as they hint at slowing of the Federal Reserve (Fed) rate hike. The US bank also mentioned that the US dollar moves relies heavily on the Fed call.

Key quotes

Over the past few quarters Fed has consistently surprised by its hawkishness, and consequently the USD was strong.

We expect the Fed to become more sensitive to softer activity dataflow now that they have moved policy rates above what was historically considered as neutral.

We note the signs of peaking inflation, and of inflation forwards. Brent is sub 100, and it has historically strongly correlated with inflation breakevens.

Also read: US Dollar Index looks to regain 109.00 ahead of US Durable Goods Orders, Jackson Hole