Economists at Westpac are looking for more DXY downside near-term, while US yields remain contained and pessimism toward Europe moderates amid a notable lifting in the pace of vaccination and reopenings.
The US dollar’s tough start to Q2 continues
“US Dollar Index can trade to the low-90s near-term, but its year to date range of 89.2-93.4 seems unlikely to be threatened anytime soon.”
“Material DXY downside seems unlikely. A host of major macro risk events are pending resolution including; 1) German federal elections in September; 2) the fate of President Biden’s infrastructure bill, not to mention the yet to be released part two of the plan; 3) Fed tapering prospects, if the US rebound proves durable beyond reopening and stimulus fuelled near term strength; and 4) ratification of the Recovery Fund across European capitals in coming months and prospects for joint Eurozone bond issuance.”
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