USD index relinquishing overvaluation – Westpac
|Richard Franulovich, Research Analyst at Westpac, explains that near term USD index risks skewed toward a test of the lower end of its Election Day range (95.88-98.70) as regional Richmond/Empire surveys flag an ISM next week toward 50.
Key Quotes
“Absent a shock a 14 June Fed hike is a done deal but the USD has struggled to capitalise, yield spreads if anything are moving against the USD as Eurozone growth has firmed and ECB officials signalled a nod to normalisation may be seen at their Jun and Sep meetings.”
“Trump’s growth policies face obstacles, notably the challenge Republicans have finding a consensus that satisfies House conservatives and centrist Senators. “Russiagate” raises the political obstacles yet further, both as an all-consuming distraction and by reducing the president’s political capital. Political risks surge yet further in September when a new government funding bill is due and the debt ceiling comes into play.”
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