USD: Luck seems to have run out - ING
|In view of Viraj Patel, Research Analyst at ING, the US dollar's luck seems to have run out as investors have been dealt with yet another reality check on the prospects of tax reforms being swiftly implemented and signed into law.
Key Quotes
“President Trump's social media feud with senior Republican Senator Bob Corker somewhat sums up the ongoing struggles the White House faces in pushing its ambitious policy agenda through a sceptical Congress. Plus, the administration’s policy schizophrenia – with the focus intermittently changing between trade, healthcare and taxes – means that it’s near-on impossible for us to factor in any meaningful fiscal stimulus into our USD outlook. While on paper tax reforms may be great for the $ (though we have our reservations here now), the reality is that chasing this story has proved to be an unprofitable strategy this year.”
“We don’t expect this to change anytime soon and think the USD remains a sell-on-rallies. On the topic of Trump policies, worth noting that the President is reportedly set to unveil NAFTA proposals that may ‘throw the deal into peril’. We think this is a case in point for staying cautious over the $ in the medium-term.”
“It would be remiss not to mention the Sep FOMC minutes today (1900 BST), but for some time now our motto has been that the Fed remains merely a subplot for the USD. If anything, the minutes will show the current dichotomy within the Fed on big-picture issues related to the US economy. Such mixed messages are why we think markets will remain sceptical over pricing in a steeper US rate curve.”
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