Barclays Analyst Predicts Dollar Rebound Ahead of Fed Meeting

PANews, September 17: Barclays FX strategist Skylar Montgomery Koning believes the dollar is poised for a rebound, citing traders' overestimation of the Federal Reserve's rate cut and underestimation of Tuesday's retail sales data. She predicts that stronger-than-expected retail sales will shift market bets towards a smaller rate cut, boosting the dollar.

With just two days before the Fed's interest rate decision, uncertainty among traders is at its highest level since 2007. The consumer report is one of the last pieces of information before the announcement.

Barclays expects the Fed to deliver three 25 basis point rate cuts this year, as the US economy remains robust. Montgomery Koning believes the market has a tendency to overreact to rate cut expectations. "Looking at historical data during those soft-landing periods, the market has always overestimated the size of Fed cuts. When expectations shift, the dollar tends to bounce back," she said.