USD: Ceding ground - Westpac
|According to Richard Franulovich, Head of FX Strategy at Westpac, USD is ceding ground as markets perceive global trade risks have dissipated with the US administration's plans to impose an initial 10% tariff on China on the low end of expectations.
Key Quotes
“The threat of a more punitive 25% levy remains, but only if a deal is not reached and not until 1 Jan 2019, giving US corporate time to adjust supply chains.”
“FOMC next week likely signals a firm assertive intent to press ahead; August CPI benign but most activity data, surveys and labour market signals since the last FOMC have been impressive.”
“Updated dots likely show another hawkish migration, if not the median then certainly the distribution.”
“Medium term USD uptrend intact but near term consolidation warranted given markets already embrace a potentially hawkish FOMC as yields break 3%+ and with positioning very long USD.”
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