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According to Richard Franulovich, Head of FX Strategy at Westpac, US data continues to underscore the exceptional resilience of the US growth story and the narrative is very well worn and discounted, rates markets pricing in +60bp in Fed hikes through to June-2019 vs a likely +75bp as signaled in the Fed’s dots.

Key Quotes

“The rise in long-end yields is taking on a less USD positive tone lately too, the bulk of the latest leg higher coming from term premium rather than Fed hike expectations.”

“US midterms less than a month away (6 Nov). History, polling, fundraising and Trump’s low approval ratings suggest Democrats will retake House but fall short in the Senate.”

“Long term USD uptrend has further to run but with Fed pricing the next six months converging on the dot plot and midterms on the horizon, USD likely to consolidate 94-97 a while longer.”