USD: Premature calls for a peak - Westpac
|In view of Richard Franulovich, head of FX strategy at Westpac, calls for a peak in the USD’s multiyear run up are premature as the Fiscal-fueled US outperformance, aided by higher wages growth, likely extends well into 2019, producing another year of USD-supportive desynchronised global growth.
Key Quotes
“However, there's little on the near term event risk calendar to prompt a meaningful repricing of Fed expectations, now down to just one more hike in 2019 by mid-year.”
“If anything, the plunge in energy prices will take a bite out of US headline inflation prints (due next week) while the Dec 19 FOMC could see some of the more hawkish dots in the Fed’s projections ease back (around a likely unchanged median).”
“That likely keeps the USD defensive near term before medium term strength resumes in 2019. USD index weakness should not extend much beyond 94-95.”
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