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Mark McCormick, North American Head of FX Strategy at TD Securities, explains that after making a marginal new high the USD is under pressure this morning.

Key Quotes

“The move reflects the reversal of month-end rebalancing alongside another move by the Chinese to inject economic stimulus. The latter should be more likely seen as an effort to stabilize the economy amid the trade wars and deleveraging efforts. Nonetheless, we have noted that the market has been pricing in more stress than justified by the growth outlook.”

“This setup alongside lopsided positioning offers more room for a convergence with US assets.”

“Besides positioning and the midterms, we note the USD is now trading about a touch over 3% rich to our global factor model. We haven’t seen both valuation and positioning leaning this much in one direction since late Q2, increasing the focus on the midterms.”