Greg Gibbs, Founder, Analyst, & PM, Amplifying Global FX Capital Pty Ltd, explained that the turn lower in the USD in recent sessions feels like a technical retreat from resistance.
Key Quotes:
“It comes despite intensifying risk from a trade war, ongoing political risk in Italy and a tightening US labour market.”
“However, we are wary that the USD may continue to weaken in the near term.”
“Political risk in the USA is rising. A trade war could be seen as a threat to US hegemony and support for tariffs from the US public may waver.”
“Global growth indicators have weakened, but there is scope for confidence to improve, even if risks remain elevated.”
” The Fed has sent mixed messages. Longer term concerns over the US twin deficits could return.”
“The AUD outlook remains mixed. Partial indicators point to more rapid economic recovery, but the housing market may be deteriorating. Higher coal prices have boosted the terms of trade, but risks from a trade war and China’s regulatory crackdown on shadow-banking remain elevated.”
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