USD decline persists - Westpac

Imre Speizer, Research Analysts at Westpac, explains that the five-month decline in the USD persists as Fed concerns around low inflation are growing, influential insider Brainard noting last week that if the soft inflation picture continues it could ultimately lead to a reassessment of the Fed’s policy path.

Key Quotes

“This week’s event calendar should be minor for markets: the JOLTs survey and the Fed’s LMCI. The Fed is in speech blackout ahead of the 14 June decision.”

“3 months ahead: Trump’s growth policies face obstacles, notably the challenge Republicans have finding a consensus that satisfies House conservatives and centrist Senators. “Russiagate” raises the political obstacles yet further, both as an all consuming distraction and by reducing the president’s political capital. Political risks surge yet further in September when a new government funding bill is due and the debt ceiling comes into play.

Our medium-term core view of a rising US dollar is based on normal service resuming (political risks dissipating) and US growth and therefore interest rates and the US dollar resuming the trend rise witnessed in 2016.”