US Dollar: Downside risks build into FOMC – Scotiabank

FXStreetOct 27, 2026 5:56 PM

View all comments（0）



Scotiabank strategists Shaun Osborne and Eric Theoret note the US Dollar (USD) is supported by sentiment even as rate differentials soften. They highlight a widening gap between US Dollar Index (DXY) and fair value, and argue that a neutral Federal Reserve (Fed) decision on Wednesday could leave USD risks skewed lower as disinflation trends are acknowledged.

Risk appetite weighs on Dollar outlook

"G10 currencies are mixed with a relative performance distribution that is suggestive of mild risk appetite in overall quiet trade."

"Rate expectations are muted, with 3bpts of tightening priced for tomorrow and 22bpts expected for December."

"We note the widening gap between the DXY (102.2 spot) and our FV estimate (100.5), reflecting recent sentiment-related support to the USD as interest rate differentials have softened and eroded its fundamental support."

"A neutral hold would leave risk for the USD tilted firmly to the downside, as policymakers could easily endorse the disinflationary trends previously highlighted among the narrower measures of inflation."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.

Comments (0)

Click the $ button, enter the symbol, and select to link a stock, ETF, or other ticker.

Commenting Guidelines

Recommended Articles

US September PCE Inflation Rises to 3.6%, Gold Drops Below $4,000, Bitcoin Falls Below $77,000

TradingKey - On October 30, gold (XAUUSD) and Bitcoin (BTC) remained under pressure. U.S. PCE inflation data for September showed year-on-year increases in both headline and core inflation. Coupled with the Federal Reserve holding interest rates steady while delivering a hawkish signal, market expectations for another rate hike in December further intensified. After falling more than 1% in the previous trading session, spot gold briefly dipped below $4,000 intraday today, while Bitcoin extended its decline, dropping below $77,000 at one point to hit a six-week low.

Kospi Gaps Down Over 4%, Kioxia Tumbles Over 7%, SK Hynix and SoftBank Slide Over 5%

The KOSPI gapped down 4.1%, falling below 5,700 points, with Kioxia dropping over 7%, while SK Hynix and SoftBank tumbled more than 5%.

Intel Q3 EPS Up 126% YoY, but Q4 Guidance Misses Estimates; Shares Plunge over 21% After Hours

Intel (INTC) reported its Q3 FY2026 financial results, where rapid growth in its data center business drove improvements in revenue and operating profit, with adjusted earnings per share exceeding market expectations. However, PC segment revenue continued to decline, and the midpoint of its Q4 revenue guidance fell short of both the current quarter and market expectations.

Amazon Shares Plunge 11% After Hours as Q3 Revenue Misses Estimates, Free Cash Flow Negative $33.456 Billion

On October 29, Amazon (AMZN) released its third-quarter 2026 financial results. AWS revenue growth accelerated further, beating market expectations, and the group's operating margin reached a record high. However, total revenue fell slightly short of expectations, advertising revenue missed forecasts, and ongoing investments in AI infrastructure continued to widen the free cash flow deficit. In extended trading, the stock fell over 11% at one point before narrowing its decline to 5.39% to trade at $230.64 as of press time.

【US Pre-Market】Google, Marvell Both Fall Over 11%, Lumentum Rises Over 6%; Amazon, Intel to Report Earnings After the Close

TradingKey - In pre-market trading on October 29 ET, the three major US stock index futures collectively weakened. As of press time, Dow futures were down slightly by about 0.08%, S&P 500 futures fell approximately 0.28%, and Nasdaq 100 futures dropped around 1%.

Featured Tools