TD Securities: If the Federal Reserve is cautious about cutting interest rates, the dollar could rise

TD Securities strategists said in a note that the dollar should rise if the Federal Reserve cuts interest rates by 25 basis points next week but is cautious about further cuts. They said the market expects successive rate cuts as concerns about economic growth become critical. However, the Fed is likely to dampen those expectations, highlighting potential inflation risks. "Powell can signal that the Fed is not on a pre-determined path of rate cuts and will continue to monitor upcoming data to assess risks." That would boost the dollar. However, they said the dollar will still fall in the long term and any rally is a good opportunity to sell.