Rate cuts by year-end

• Fed: 50 bps (85% probability of no change at the upcoming meeting)
• ECB: 19 bps (94% probability of no change at the upcoming meeting)
• BoE: 47 bps (58% probability of rate cut at the upcoming meeting)
• BoC: 28 bps (71% probability of no change at the upcoming meeting)
• RBA: 73 bps (80% probability of rate cut at the upcoming meeting)
• RBNZ: 28 bps (81% probability of no change at the upcoming meeting)
• SNB: 8 bps (75% probability of no change at the upcoming meeting)

Rate hikes by year-end

• BoJ: 14 bps (97% probability of no change at the upcoming meeting)

We can see that there hasn’t been much of a change compared to the latest update here. On the contrary, the market got a little bit more dovish, but the changes are negligible.

The culprit for US dollar strength is likely positioning. Dollar shorts are very overcrowded, so it doesn’t take much to trigger such squeezes. The latest Bank of America Global Fund Manager Survey here showed fund managers being the most underweight the US dollar in 20 years.

For traders, being aware of expectations and positioning is key to manage risk and find opportunities.

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