USD: Burdened by politics and economics - Westpac
|Not a lot going for the USD other than a low bar for positive surprises – Trump reflation expectations have been dashed by the Senate legislative failure on health care and sentiment on near term growth has eased (Westpac’s US surprise index is at multi month lows), explains Richard Franulovich, Research Analyst at Westpac.
Key Quotes
“Against that, risks around the debt ceiling and a government shutdown in late September are elevated, not least because of disagreement in the White House, let alone in Congress. Treasury Secretary Mnuchin favours a clean debt ceiling increase, Budget Director Mulvaney favours cuts and other budget changes in exchange for a debt limit increase.”
“The USD should continue to trek lower if the US inflation continues undershoot as we expect. Some labour market indicators like the employment to population ratio signal further inroads need to be made on the labour market front before wages pressures build.”
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