USD: Some downside risks alleviated - Westpac
A three month extension in funding and a three month increase in the debt ceiling to Dec alleviate some downside risks for the USD but do not entirely eliminate them, feels Richard Franulovich, Research Analyst at Westpac.
Key Quotes
“The Fed is sure to announce balance sheet tapering Sep 20 but they likely cut PCE and neutral rate forecasts too, hardly USD positive. The 4 CPI reports before the Dec 15 Fed must show a definitive uptrend - a high bar - to satisfy the growing tribe that are wary about a more sustained inflation undershoot.”
“Key long term USD risk - Trump’s tax overhaul where the path to success continues to narrow. Congress is sure to balk at the sheer size of the package – with personal and corporate tax cuts amounting to more than $5trn alone. Major fissures have opened between President Trump and GOP leaders. Multiple flashpoints including hurricane risks, North Korea and the ongoing special counsel investigation into Russia and Trump threaten top push tax cuts onto the backburner.”
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.
