USD: Generic strength without exception - Westpac
|A deteriorating global trade picture is of course unambiguously negative EM FX and could have been expected to produce a more mixed picture vs G10 (i.e. USD strength vs the dollar bloc, weakness vs the more defensive EUR, CHF & JPY), but that has not been the case as the USD is enjoying generic strength without exception, according to Richard Franulovich, Research Analyst at Westpac.
Key Quotes
“We should not expect trade tensions to defuse soon. Meaningful concession from China seem unlikely, European leaders have signaled they will respond in kind to potential auto tariffs, while Nov mid-terms argue against a more conciliatory approach on the US side (certainly objections from US corporates and congress have done little to turn the tide).”
“US data outperformance persists too (US NFIB small business sentiment was solid and job openings remain elevated, while the German ZEW took another leg lower), cementing US growth leadership and showcasing a more robust US story amid growing trade tensions. The broad contours favour sustained USD support.”
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