USD rebounds could see DXY retrace back towards 101-102 area - Westpac
|Tim Riddell, Research Analyst at Westpac, explains that the unwind of Trump trades has seen some sharp pullbacks to election levels (notably USD index and US 10yr yields) but the USD rebounds could see DXY retrace back towards 101-102 area.
Key Quotes
“The sharp fall in Atlanta Fed’s GDP nowcast (hitting 0.5% after 3.5% in early Feb) appears to have tracked the sentiment behind the unwind.”
“The solid Fed Beige Book for March highlighted that growth prospects are still developing at the modest to moderate pace previously stated with tightness in labour markets. Fed officials have repeatedly noted that their assessments of the economy have not included fiscal stimulus from the Trump Administration for 2017. Treasury Secretary Mnuchin affirmed that tax reform is unlikely this year, but also firmly rebutted any administration change in USD policy. Firmer data should see some rebounds of the unwind into month end, though government shutdown and geopolitical concerns should cap USD.”
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