USD: Long-term appreciation under threat - Westpac

Richard Franulovich, head of FX strategy at Westpac, suggests that the USD’s 7 ½ year appreciation is under threat as markets question the viability of the Fed tightening cycle.

Key Quotes

“But there will be ample opportunities in the year ahead for sustained bursts of USD strength.”

“USD downside also limited by ongoing poor growth momentum in the Eurozone and China. Key US PMIs in the new year created the impression of a loss of the US’ long standing growth leadership position but subsequent weak data out of both the Eurozone and China put paid to that. Political risks remain elevated too, in the UK (Brexit) and Europe (European Parliament elections will be held late May).”

“Near term USD index rangebound (95-97) as key risks ebb and flow including the govt shutdown, China-US trade negotiations and Brexit.”