USD: Short term multi day bottom? - Westpac

DXY’s sharp bounce off key support levels sub-92 has all the hallmarks of short term multi day bottom, according to Richard Franulovich, Research Analysts at Westpac.

Key Quotes

“It’s hard to see a sustained multi week rally. The run of stronger data including GDP, retail sales, regional PMIs and consumer confidence could be short circuited by Hurricane Harvey, as that event is likely to temporarily displace payrolls, housing retailing, et al in recent weeks.”

“US gov’t shutdown and debt ceiling risks in Sep will be problematic too, last minute drama assured thanks to Trump’s willingness to court a shutdown in exchange for border wall funding combined with precious little goodwill between Trump and Congress.”

“The Fed is sure to announce balance sheet tapering Sep 20 but they likely cut PCE and neutral rate forecasts and the 4 CPI/PCE reports before the Dec Fed must meet and ideally beat expectations to justify a hike - a high bar.”

“Key long term USD risk - Trump’s tax overhaul where the path to success continues to narrow.”