USD Lacks Underlying Support - Westpac
Richard Franulovich, Research Analyst at Westpac, suggests that a spike
in risk aversion may save the USD on selected crosses near term but the
beyond that the currency lacks underlying support.
Key Quotes
“Q1
growth expectations are in freefall, the Atlanta Fed’s latest nowcast
pegging Q1 growth at just 0.4%. Markets are pricing a mere 20% chance of
a June Fed hike given the time needed to rebuild confidence in the
outlook after a soft Q1, not to mention the proximity of the UK EU
referendum in June. But we won’t get too carried away - DXY downside
shouldn’t extend much beyond key support into 92.5-93.0.
Since
Jan/Feb US financial conditions have eased and the PMIs have risen
strongly. Developments a year ago could prove instructive. Back then a
dovish March FOMC upended expectations and sent the USD sharply lower
into mid-May 2015 before a steadily firmer complexion to the data and
diminished Fed anxiety helped the USD stabilise.”
(Market News Provided by FXstreet)