We’re still resolute in our call for one last round of USD strength before this quarter is out. That’s largely because there’s enough evidence now that the US economy has adapted to higher rates far better than most have expected, and we still don’t think markets are paying full tribute yet to this theme.

Markets have recalibrated and are now pricing in decent odds of that first cut coming at the June meeting. That’s still a bit before when we expect the Fed will ease (July), and further recalibration there are in keeping with our call for a firmer USD in the near term.

Beyond March, we have the USD profile trending lower as the economic outlook outside of North America improves. Additionally, longer-term valuations still look very unfavourable for the USD. Market participants outside of the US should look to take advantage of the higher USD in the coming months and lock in longer-term hedges while the getting is good.