USD showing more backbone, helped by stronger than expected data e.g. payrolls, small biz sentiment and record job openings in the JOLTS survey, according to Richard Franulovich, Research Analyst at Westpac.
“Our surprise index has long warned that the bulk of the run of weaker data is in the rear view mirror. But that will likely only interrupt the USD down move rather than trigger a meaningful reversal.”
“EUR is unlikely to correct meaningfully lower until the ECB formally announces tapering, in the same vein the USD finally turned consolidative once Fed tapering was formally announced (i.e. buy the rumour, sell the fact). Secondly, Washington is rushing into another debt ceiling and government shutdown showdown in Sep/Oct.”
“Late Q4 looks more fertile for USD gains – by then these event risks will have been negotiated, seasonals are more supportive and Trump reflation will enjoy a fresh burst of energy as Washington pivots towards tax cuts.”
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