USD upside appears exhausted – Westpac
|Richard Franulovich, Chief Currency Strategist at Westpac, believes the upside in the greenback could have run out of steam for the time being.
Key Quotes
“At 44%, 15 March FOMC hike odds are likely near their upper range pending Feb payrolls (10 March) and with that meeting still a month away. That said, the USD has lagged yields and has scope to play catch up. There are at least 8 Fed speakers scheduled to end-Feb and the clear theme should be that March is live”.
“President Trump's address to a joint session of Congress 28 Feb is shaping up as a key date too - he could finally outline some precise markers on tax cuts/reforms and infrastructure beyond campaign promises. Meanwhile on the EUR side, safe haven flows are likely to suppress core bund yields at least until upcoming elections in the Netherlands (15 March) and then France (2nd round run-off 7 May) are out of the way”.
“The Feb DXY up move is showing some hints of exhaustion but with yield support still trending strongly in its favour, the topside still beckons, certainly until Trump’s Congressional address, Feb payrolls and Dutch and French elections are out of the way”.
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