USD does not appeal here - Westpac

USD index still does not appeal here as it hovers near the upper end of its two month 88-91 range, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“The USD never truly capitalised on more attractive yield differentials. The threat of a more hawkish Fed remains the USD’s best last hope yet that risk seems remote given high and rising global trade tensions, elevated market volatility and still benign wages and inflation trends. The median FOMC “dots” did not shift sharply higher at their March meeting before these risks coalesced so it seems even less likely now, even though many rightly presume that tariffs are primarily a negotiating tactic and the aggregate economic effect of tariffs on growth and inflation will likely prove minimal.”

“The recent trend of US data outperformance has faded a touch too as US manufacturing and service PMIs ease from multi-year highs.”

“USD likely remains stuck at lower levels for longer.”