USD Index: Risks of another leg lower – ING

The fallout of the collapse of Silicon Valley Bank and Signature Bank is still unfolding. What can we expect today? Economists at ING note that risks are tilted to the downside for the US Dollar.

AUD and NZD still look attractive in a risk recovery

“We think the balance of risks is tilted towards another leg lower in the Dollar. The Fed and US regulators have taken decisive steps to restore market confidence and may be ready to do more (on the monetary side, when it comes to Fed) should financial risks fail to abate.”

“While it is true that the move in rates appears overblown, there is ample room for a bounce in risk sentiment, and FX is currently much more sensitive to equities than rates.”

“AUD and NZD still look attractive in a risk recovery.”

“Should equities fail to rebound, CHF and JPY may emerge as outperformers.”