According to Richard Franulovich, head of FX strategy at Westpac, USD is easing back lately as several negatives percolate including a scaling back of ECB easing expectations, a BoC that is sticking to its neutral guns, easing political risks in Hong Kong and a lousy US ISM report.
Key Quotes
“There’s no reasonable prospect of a significant breakthrough in US-China trade negotiations; certainly there’s no deal on the table that gives the appearance of concessions from China ahead of the PRC’s 70th anniversary celebrations in October, not to mention one that involves a rewriting of domestic laws regarding intellectual property.”
“That background should continue to provide a persistent safe haven bid to the USD, limiting pullbacks to the 97.0-97.5 zone.”
“Beyond that, the broad sweep of data still points to reasonable US consumer momentum, enough to maintain growth at an even-keel trend pace, while Brexit and Italy risks continue to dampen the Eurozone outlook.”
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