USD is in healthier shape - Westpac

According to Richard Franulovich, Research Analyst at Westpac, the USD is in healthier shape right here as outside hurricane impacts, US growth appears to be picking up steam, aided in large part by very easy financial conditions.

Key Quotes

“A stronger Richmond Fed headline index (+19, well above consensus) matches the strong rise in the Philly and Empire surveys last week, all pointing to a stronger ISM next week.”

“Markets are more likely than not to err on the side of pricing in higher odds for a large tax cut too. Altogether, the DXY index can easily gain 1% to 2% before all is said and done.”

“But as tax negotiations intensify in latter Q4, significant procedural, fiscal and political constraints are likely to become apparent. The size of the tax cut is simply too large to be realistic (costed at more than $4trn over a decade) and repealing deductions will prove politically difficult.”