USD at risk of faltering again – Westpac

In view of Imre Speizer, Research Analyst at Westpac, the lack of core inflation pressures leaves the USD at risk of faltering again.

Key Quotes

“This week’s data calendar highlights are the inflation data (PPI 13th & CPI 14th).”

“The unwind of “Trumponomics” and lowered growth expectations have reduced market pricing for the Fed. Policy remains accommodative and the Fed sees little reason to depart from their steady rate hike and balance sheet shrinkage plans.”

“3 months ahead: The USD will struggle to make much headway. Growth and inflation do not warrant a hawkish Fed, and Republican Party struggles over health care reform are a foretaste of likely similar struggles on tax cuts, tax reforms or infrastructure. There is a larger disappointment trade for US assets when the realisation dawns that Trump’s reflation policy will be heavily watered down and delayed, but that is a story for late 2017.”