USD Index: Choppy trading may extend to Thursday – Scotiabank

USD builds on Tuesday rebound on soft risk appetite. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes Greenback’s outlook.

USD gains on soft risk mood

Weak risk appetite seems to be driving broad USD gains.

The DXY still looks relatively ‘rich’ versus fair value based on index-weighted 2y spreads.

Monday’s sharp fall and Tuesday’s snap higher in the USD generally suggest market sentiment is highly fluid, leaving a bit of a question mark over the sustainability in the USD moves at the moment, in my opinion. But choppy trading may extend to Thursday and the US Q3 GDP report.