USD: Cautious stance for the week ahead - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that data/events this week validate a cautious USD stance: hourly earnings remain muted, the NFIB survey and JOLTS job ads are cresting.

Key Quotes

“More Fed speakers seem less committed to a hike before year’s end (Harker & Brainard), while Yellen is increasingly hedging on the “transitory inflation slowdown” thesis, noting that certain price reductions “partly” explain low inflation, a change from “significantly explain”.”

“The Russian election meddling controversy continues to escalate in ways that threaten Trump’s pro-growth agenda too.”

“3 months ahead: The USD will struggle to make much headway during the next month or two. Growth and inflation do not warrant a hawkish Fed, and Republican Party struggles over health care reform are a foretaste of likely similar struggles on tax cuts, tax reforms or infrastructure.

Longer term, though, we would not rule out a rebound in the US dollar by year end if the Fed sticks with its tightening path, and US data surprises eventually bottom out.”