DBS senior FX strategist Philip Wee said the dollar could be pressured by
divergence in forward guidance after the Fed removed forward guidance and held
rates steady. Wee said Fed chair Kevin Warsh’s move has left policy in a
“monetary mirror maze,” increasing volatility and leaving markets groping in the
dark. By contrast, the ECB’s unified signaling of a September rate hike gives
the euro a clear relative advantage. If the Bank of England consensus breaks and
unexpectedly hikes later today, the pound would likely strengthen.
