USD Still Looks Challenged Here - Westpac
Richard Franulovich, Research Analyst at Westpac, suggests that the USD
still looks challenged here with Q1 growth now a write off the Fed will
want to see at least 2-3 months of stronger data to be sure residual
seasonality has once again been the culprit for depressing Q1 growth.
Key Quotes
“That
calls into question a June 15 Fed hike, which was always looking
dubious given proximity of the June 23 UK EU referendum. Stability in
China is another challenge to the USD, via China’s impact on commodity
prices and EM capital flow trends. A potentially less dovish sounding
Draghi at next week’s ECB press conference probably weighs on the USD
too. The DXY has bounced off key support levels but doubt it has the
legs to forge materially higher.
Event risk: The
US data calendar is populated mainly with housing and PMI data next
week – March starts and existing home sales, April NAHB, along with the
April Philly Fed survey and Markit’s prelim manufacturing survey.”
