USD losses to accumulate in 2023 – Scotiabank

The US Dollar is weaker but trading has been choppy following the US December inflation data. Economists at Scotiabank expect USD weakness to linger in 2023.

USD yield support has peaked

“Peak US inflation means peak US yields which in turn means peak USD.”

“Friction between Fed messaging and market pricing may keep the USD trend choppy in the near-term.”

“Positioning and sentiment have shifted against the USD in the past month or two but there is ample room for this trend to develop.”