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According to Richard Franulovich, head of FX strategy at Westpac, soft US surveys tentatively back a recovery signal from easing financial conditions and falling “policy uncertainty” suggests that could have legs into the New Year.

Key Quotes

“Global trade uncertainties will likely remain a headwind for the foreseeable future even if a phase one deal is signed soon. But, one encouraging offset is the sharp easing in US financial conditions.”

“Taken at face value the easing in financial conditions suggests the worst of the US slowdown may be in the rear-view mirror and going forward US growth could if anything accelerate.”

“Soft surveys tentatively back that message.”

“After hitting 34-year highs in early 2018 our soft survey composite index fell sharply in the subsequent 18 months, rising trade uncertainties, global weakness and the waning Trump tax cut boost all playing their part. But, the soft survey readings for October and those released so far in November point to some encouraging stabilisation.”

“While that’s all very encouraging any “recovery” has to be considered fragile and lacking in breadth at a global level.”