DXY: Long near 100, target 108 - Societe General

Kit Juckes at Societe General expresses his take on the outlook for DXY going forward.

Key Quotes:

“Bond markets are in buoyant mood, dollar bulls therefore, not so much. That's a bit unfair because the dollar is actually a little higher across the board this morning, but it will be heavy going in the absence of either a shift back towards rising bond yields or a major emerging market upset that isn't easy to see at the moment.”

“Given the political risk in France, and the fact that that Bund yields have actually fallen a bit faster than Treasuries in the last fortnight, short Euro trades still look attractive here and so too, do longs in DXY. “

“We've recommended buying around 100 with a target around 108 (I dream of 110 and may eventually settle for 106) and having got as low as 99.2 last week we are at 100.4 this morning. Long here with a stop at 99.10 appeals. In terms of where EUR/USD is going, all that still equates to wanting to be short with a stop above 1.08 and a target as close to parity as political risk allows. It may be slow moving, and the German trade data this morning are more grist to President Trump's currency manipulation mill, but the bias for the next few weeks is to move slowly lower.”