USD: Too negative? - ANZ

The USD hasn’t been able to buy a trick over recent months, as political turmoil, together with some mixed economic data – especially with regards to inflation – has seen sentiment sour, explains the research team at ANZ.

Key Quotes

“Even though White House economic advisor Gary Cohn (who some suggest is in the running as the next chair of the Federal Reserve) stated in a weekend interview that the US must cut its corporate tax rate by at least a third to compete with other developed countries and that “My No.1 priority for now until the end of the year is taxes. My second priority is taxes. And if you’re confused, my third priority is taxes”, it would take a brave person to say that the US administration is about to have a sharp turnaround in its ability to pass reforms. But by the same token, an economy with an unemployment rate at 4.3% and average earnings growth at 2.5% doesn’t appear that bad either. And it’s not – both measures are better than the equivalent figures in New Zealand. So the question is then has USD sentiment actually soured too much? We are increasingly leaning in that thought direction, with our ANZ colleagues noting that “risk reward does not favour selling the dollar at these levels”.”