Dovish
Dovish describes a central bank leaning toward rate cuts or looser policy, which usually weakens its currency.
Dovish means a central bank leans toward rate cuts or looser policy. Dovish surprises usually weaken the currency because lower rates make it less attractive.
Dovish describes a central bank or policymaker inclined toward looser monetary policy: interest rate cuts, expanded bond buying, or a slower path to tightening. Dovish surprises tend to weaken the currency because lower rates make it less attractive to hold. It is the direct opposite of hawkish.
How It Works
- Used to describe decisions, statements, minutes and speeches
- A dovish cut with more cuts signalled is weaker for the currency than a one-off cut
- The opposite is hawkish
Trading Tips
Dovish central banks make their currency a funding currency for carry trades
Watch for the market pricing the next move - the reaction is about the path, not the level
Dovish Example
Say a Fed governor floats insurance cuts while inflation cools. The dollar slides 100 pips across the board, gold rallies $30, and stocks cheer cheaper money ahead. Dovish words ease financial conditions before any vote.
How Traders Use Dovish
Trade dovish pivots by selling the currency and buying duration, but respect the reversal risk: if data re-accelerates, the same officials turn hawkish within weeks. Never marry a policy view.
Related Terms
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