USD/XOF Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Federal Reserve has held interest rates steady, which contrasts with the steady fundamentals of the West African CFA Franc as confirmed by the Bank of Central African States.
• Risk/commodities: Recent improvements in global risk appetite are pressuring the US dollar, leading to a decline, while the stability of oil prices may also impact the dollar negatively if demand improves.
• One macro factor: The anticipated release of key US payroll and inflation data could influence future actions by the Federal Reserve regarding interest rate adjustments.
Range:
Expect the USD/XOF movement to stay within its recent stable range, neither testing the extremes nor making significant shifts.
What could change it:
• Upside risk: A stronger-than-expected US employment report could strengthen the dollar.
• Downside risk: Increased geopolitical tensions may further erode confidence in the USD, exacerbating its decline.
