Tactical USD long into the Mar FOMC - Westpac

Sandeep Kanihama FXStreet Contributor

The prospect of steel and aluminum tariffs undermines what had been a decent case for a tactical USD long into the Mar 20/21 FOMC, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“Markets will pivot around two key considerations – will any prospective tariffs include exemptions and who will replace Cohn as Trump’s chief advisor. Tariff exemptions and a mainstream probusiness adviser should trigger a relief rally, and vice versa.”

“Beyond that, longer term reservations about the USD persist: three Fed hikes are now discounted into year’s end. Any further Fed-driven USD upside is thus contained to just one more hike in 2018 – the bar for five hikes is impossibly high. Protectionist rhetoric is unlikely to ease anytime soon either and may if anything may escalate into US midterms.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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