USD: Little more upbeat - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that Westpac is little more upbeat on USD than we were a few weeks ago.

Key Quotes

“While we still believe markets are pricing in the delivery of more policy change than is likely to be delivered this year on tax reform and infrastructure, for the week ahead, strong US data should catch the eye. A stunning surge in consumer confidence and healthy regional PMIs augur well for the Mar ISM and payrolls data. These will be welcomed by Fed officials as they talk up the case for more rate hikes. Westpac now expects a June hike, a move currently 60% priced in. The USD’s window for strength is brief though, with markets likely to then switch their focus to debt ceiling/govt shutdown risks in mid-to-late April. This week’s event calendar is busy, including Fed minutes, both ISM surveys and March payrolls.”

“3 months ahead: Incremental news continues to verify the baseline scenario for a Trump stimulus package that ultimately underwhelms in size, scope and timing. Tax reform and infrastructure will likely run afoul of the same challenging political realities that torpedoed the repeal and replacement of ACA - the Republican party remains heavily divided on infrastructure, border adjusted taxation and revenue neutrality vs debt/ deficit-funded tax cuts.”