USD Remains on its Backfoot on a Cautious Fed - TDS
Research Team at TDS, suggests that the US economic backdrop has
softened in recent months, and the weakening in consumer spending
momentum suggests that underlying domestic fundamentals have
deteriorated.
Key Quotes
“And with the
inflation backdrop still week, the case for caution at the Fed remains
strong. Nevertheless, with global headwinds abating, the dollar
weakening and financial conditions becoming more supportive, the outlook
for economic recovery remains favorable.
USD remains on its
backfoot as a cautious Fed, soft domestic data and EU referendum risks
compel a reduction in USD longs. Remain neutral but a moderate, but very
backloaded rebound in Q2, may lie ahead once we pass event risk. For
now, emphasis remains on idiosyncratic risks in non-dollar legs.”
