USD: At least one more clear leg-up on the cards - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that the toppish USD price action in front of the key 100 level raises some doubts about the uptrend but a heavy slate of event risk next week – both ISM surveys, payrolls and an FOMC meeting - should tip the scales in favour of at least one more clear leg-up for the USD.

Key Quotes

“The Richmond and Markit PMIs (both manufacturing and services) back a higher set of ISM surveys, while residual seasonality in the jobs data points to a clear bias in favour of stronger prints in Q4 (11 of the last 15 Oct-Dec releases over the last 5 yrs have beaten consensus vs just 4 of the last 15 Jul-Sep releases). The Fed statement is likely to cement Dec hike expectations too, noting that the “case for an increase in the federal funds rate has strengthened,” as per the last statement or more pointedly, should make a deliberate reference to the possibility of lifting rates in December. The USD index should make a run at 100 next week.”