7 Apr 2015
USD Index: Risk remains for a multi-week downward correction – Westpac
FXStreet (Barcelona) - Strategists at Westpac argue that risks for the USD lies to the downside, expecting the USD Index to see a downward correction before the longer bull trend resumes.
Key Quotes
“Our suite of signals have been cooling on the USD for a few weeks now, especially our growth and total yield signals as US data broke to the soft side and yield differentials stopped trending in the USD's favour. That trend continues with our suite of signals turning more decisively against the USD this week and the portfolio opening a 17.4% short USD position.”
“While the level of US yields is much more enticing than say bund or JGBs, our total yield signal also tracks the rate or change (i.e. momentum) in yields. According to our metrics US yield momentum has turned negative with such speed that our total yield signal rates the USD as the least attractive G10 currency right here.”
“Higher commodity prices (mostly crude oil and base metals) also weigh on the USD via our logit signal.”
“Technical: Recent rejection of the numerically significant 100.00 level remains a negative short term influence rather than a long term game changer.”
“Risk remains for a further multi-week downward correction before the long term uptrend again takes charge.”
Key Quotes
“Our suite of signals have been cooling on the USD for a few weeks now, especially our growth and total yield signals as US data broke to the soft side and yield differentials stopped trending in the USD's favour. That trend continues with our suite of signals turning more decisively against the USD this week and the portfolio opening a 17.4% short USD position.”
“While the level of US yields is much more enticing than say bund or JGBs, our total yield signal also tracks the rate or change (i.e. momentum) in yields. According to our metrics US yield momentum has turned negative with such speed that our total yield signal rates the USD as the least attractive G10 currency right here.”
“Higher commodity prices (mostly crude oil and base metals) also weigh on the USD via our logit signal.”
“Technical: Recent rejection of the numerically significant 100.00 level remains a negative short term influence rather than a long term game changer.”
“Risk remains for a further multi-week downward correction before the long term uptrend again takes charge.”