US outperformance continues

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The economic divergence between the US and the rest of the world has become increasingly pronounced. US inflation pressures remain stickier than in most other parts of the world. US rates have continued to rise, with markets now expecting less than 45bp worth of cuts for 2024. The global manufacturing cycle is softening, but it is seen as a temporary and mostly inventory-driven upturn. Oil prices have risen close to $90 USD/bbl, but further upside is limited. The USD has been the big winner, with EUR/USD breaking below 1.07. The JPY continues to perform poorly. In the near term, lower USD rates are expected, which could provide temporary support to EUR/USD. However, the long-term case is for a lower USD based on stronger US growth dynamics. EUR/NOK is expected to move higher over the year, and SEK is expected to weaken. Risks to the forecasts include a sharp drop in core inflation and a more resilient global economy. A much harder landing would require a sharp easing of global monetary conditions, leading to a weaker USD.

#Us #Economy #Inflation #Usd #Eur/usd #Jpy #Eur/nok #Sek

https://www.fxstreet.com/analysis/us-outperformance-continues-202404161137