DXY could still reach 97.00 – Westpac

Richard Franulovich, Strategist at Westpac, expects the greenback to advance towards the 97.00 handle when measured by the US Dollar Index (DXY).

Key Quotes

“June and July Fed hike odds sit at 34% and 54% respectively”.

“While our base case is for the Fed to take a pass at both meetings - Chair Yellen’s concerns about asymmetric policy risks and Brainard’s caution around global risks should sway the Board - those Fed hike odds are nevertheless apt to drift higher in coming days, not least because Fedspeak should continue to hammer home the message that June is a live option”.

“June Fed hike odds can rise toward 40-45% before stabilising and the USD index can make a run at 97.0. But, would shift to the sidelines by mid-next week on risks of a contractionary ISM and soft payrolls”.