FXStreet (Edinburgh) – Strategists at Westpac reiterated their neutral stance on the greenback in the short term.
Key Quotes
“The USD’s cyclical advantages, most notably the shift in policy differentials in its favour, is now a very mature theme and there is still a relatively large overhang of USD longs”.
“Yield spreads (on a DXY weighted basis) continue to grind in its favour, though admittedly not with the same force as they did last year”.
“That trend should continue amid ongoing ECB easing and with markets far from fully pricing in Fed lift-off potentially as soon as 17 Sep”.
“A run in the USD index toward the March 2015 highs near 100 may not be on the immediate horizon but with the USD’s cyclical advantages still very much intact, dips should be limited”.
“The heavy data schedule is headlined by nonfarm payrolls and both the manufacturing and service sector ISM surveys. Regardless of the shocks to the US economy, positive or negative, payrolls have been very stable in the last 18 months, reliably generating prints in the mid-to-low 200k range, and the 225k consensus looks entirely possible. We stick with a bullish 1 week and 3 month prognosis for the USD”.
“Price was unable to maintain new 3 month highs in July and has shifted to a consolidation structure. Close below 96.28/31 would target a multi-week decline. Neutral short term bias”.
(Market News Provided by FXstreet)