USD under pressure on Trump, trade – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, assessed the current view on the greenback.

Key Quotes

“USD continues to weaken and the dollar index is now largely back at pre-Turkey levels with notably EUR/USD around 1.16 yet again. Not least, it is remarkable how USD/CHF has fallen off a cliff in recent days in a sign that this move is much about worries over Trump-related matters, i.e. the rising risk of impeachment following Cohen’s guilty plea and the US president lashing out at the Fed for hiking rates”.

“The former puts Trump under significant pressure ahead of the US mid-term elections and in our view heightens the risk of unorthodox measures such as intervention to weaken USD as part of the trade war – not least if US growth momentum wears off as we expect”.

“Last night’s FOMC minutes did little to change the overall picture of US rate policy though; today, there will be focus on the ECB equivalent and the Jackson Hole gathering will be taking off; however, we expect little news from either on policy”.