USD can see more topside - Westpac

Sandeep Kanihama FXStreet Contributor

The USD can see more topside into next week's Fed, a hike priced in but a strong “full steam ahead” message given still easy financial conditions, near certain tax cuts and constructive inflation signals in the latest CPI/PCE can still entice USD buyers, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“That backdrop likely sees a hawkish migration to the dots around an unchanged median (+75bp ‘18 & +50bp ‘19) and could see GDP revised up a smidge too (2.1% ‘18 & 2.0% ‘19).”

“Tax cuts still a point of caution. Senators Collins and Flake received assurances Congress will tackle Obamacare & immigration in exchange for their vote but conservative House GOP are strongly opposed. House Republicans from high tax states are renewing a push to stop repeal of state tax deductions too, a major revenue item the Senate will not yield to. Beyond that, struggling to see fresh USD positives: tax cuts are priced in and yield/data support has firmed yet the DXY is stuck at the bottom of a 3yr range.”

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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