Tactical USD long into the Mar FOMC - Westpac

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.” 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.