Chief Analyst at Danske Bank Jakob Christensen assessed the recent price action around the greenback.
Key Quotes
“In the majors, USD extended its recent drop helped along yesterday by US President Trump reportedly having accused Fed Chair Powell of not proving the ‘cheap money’ head he expected when nominating him. While not t he first time Trump has expressed dissatisfaction with rate hikes, it breaks the long-standing tradition of no political interference with monetary policy. It is also a hint that recent speculation that US intervention to weaken USD as part of the trade war cannot be entirely ruled out”.
“That said, we still see USD support due to carry having reached critical levels and US rates being on the rise still. This means that while speculators seemingly continue to add USD longs and positioning looks increasingly stretched this could be sustained for some time and thus does not necessarily hint at a near-term correction as it might under ‘normal’ circumstances”.
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