USD: Trump Talks Down The USD; What's Next? - Credit Agricole

Credit Agricole CIB Research notes that as President Trump talked down the USD in his interview with WSJ on Wednesday, the subsequent moves in currencies and rates were likely exaggerated by the lighter liquidity conditions.

In that regard, CACIB argues that while this will likely put pressure to further unwind USD longs, a weaker USD maybe a wish too far for a President willing to introduce fiscal stimulus before long, which could help US growth and boost inflation.

In addition, CACIB notes the the Fed remains resolutely independent and will hike in response to improving economic conditions from here.

As such, CACIB remains fairly constructive on USD for the time being, expecting improving US fundamentals and Fed tightening to boost the demand for the currency once more before long.

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EUR/USD is trading circa 1.0626 and USD/JPY is trdaing circa 109.27 as of writing.