Imre Speizer, Research Analyst at Westpac, suggests that after a strong run during February and early March, the US dollar has flipped into negative mode, the main catalyst being the FOMC meeting last week which stressed gradualism in its tightening cycle but the US dollar index (DXY) could easily fall to the multi-month range low of 99.
“This week’s event calendar is thin: new and existing home sales, and durable goods orders. Fedspeak will be more important and plentiful, including Evans, George, Mester, Kashkari, Kaplan, Bullard and Yellen.”
“3 months: We suspect the USD will falter into mid-year, but resume its uptrend thereafter. Watch the repeal and replacement of Obamacare. Delays here will push out the timetable for tax reform/tax cuts/ infrastructure and will provide an early acid test of the cohesion of the Republican Party. High risk that tax reform could run afoul of challenging political realities: even if Senate filibuster risks can be dodged via the 2018 reconciliation bill (needing just a simple majority vote) great swathes of the Republican Party remain lukewarm on infrastructure, border adjusted taxes and funding spending plans by gutting government agencies.”