Markets react to the Fed: US dollar rises and front-end yields jump
AUD/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
MUFG | Bullish | 0.7000 |
Danske Bank | Bearish | 0.6800 |
UBS | Bullish | 0.7300 |
All 22 desk targets for AUD/USD
From the original
The initial market reaction to the Federal Reserve decision shows a stronger U.S. dollar and a sharp rise in shorter-term Treasury yields. The stock market reaction was more measured, although the Dow moved from a modest gain to a small loss. The comparisons below show market lev
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The desk believes that the US dollar will continue its upward trajectory, supported by recent hawkish signals from the Federal Reserve and stronger-than-expected inflation data. Per the full note from MUFG, the dollar surged 1.4% last week, its most significant gain since the onset of the Iran conflict, driven by elevated CPI and PPI numbers and rising yields. The market is adjusting to the leadership transition at the Fed, with Kevin Warsh's upcoming remarks anticipated to play a crucial role in shaping expectations around future rate hikes, reinforcing the dollar's strength against potential market headwinds.
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