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Of the US dollar, and of Crypto
Aurelie Barthere
Key Takeaways
8 min read
  • Resilient US growth and inflation will likely lead to a pricing out of Fed rate cuts after September 2023. We expect bank lending contraction to push growth lower though, with a lag.
  • This probably translates into some short-term US dollar’s price resilience (currently testing the support) before a resumption of the downward trend for the next few months.
  • Crypto will likely continue its range-bound price action before more pronounced macro weakness forces the Fed to ease policy. All our tactical indicators are still risk-on but for the BTC call-put spread which moved to risk-off last week.

Macro puzzle

Interpreting the current macro environment and attempting to forecast it is akin to working on a complicated puzzle where no piece fits perfectly. Last week’s data gave evidence that growth was doing relatively ok in the US, with the US manufacturing PMI and its ISM counterpart both edging up, although the ISM remained below the 50 expansion/contraction threshold. New US home sales rebounded by 60k in March, a lagged effect of lower mortgage rates. Finally, consumers continued to reduce their spending on goods while increasing services consumption to a lesser extent, and as a result, managed to reach a higher saving rate of 5.1% in March.

Meanwhile, the US labor market is cooling, but not deteriorating significantly,...