In view of Greg Gibbs, Analyst at Amplifying Global FX Capital, the USD may simply be retracing after a period of strong recovery as investors had retreated from EM and higher risk markets this year.
Key Quotes
“Short term traders have gotten long USD. Even if a trade war eventuates, or Italy’s new leaders threaten to blow-up the EUR, it may take months, and in the meantime, global economic growth indicators remain solid, even if they have retreated from earlier in the year.”
“The Eurozone and UK economies are thought to have been depressed by a range of temporary factors in the first four months of the year (weather, strikes, and timing of Easter). If so, we should expect a period of better economic news in coming months.”
“We might again see a degree of synchronized global economic recovery that buoyed investor confidence last year and early this year. So far the evidence is mixed, but there is room for investors to respond if global economic reports, especially outside the USA show improvement.”
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