USD: Down across the board - TDS

The stretched USD has required a trigger to release some of the energy captured in our dashboard and Trump offered a release valve yesterday, implying that the Fed is undoing his work on the economy, notes the research team at TD Securities.

Key Quotes

“The USD is down across the board this morning which releases tension on the EM complex and allows G10 to adjust from weeks of selling pressure.”

“The coiling spring metaphor brings to mind the concentration of short exposure witnessed in the European currency space. Our HFFV gauge argues for a push to 1.16 in EURUSD. From there, we need further signs that European growth is back on track in H2 or the USD newsflows needs to turn increasingly negative. Jackson Hole could be another trigger to offer the majors a bit more breathing space.”

“We like tactical upside in EURUSD spot.”