USD Could See a Bounce to 94.00/95.00 – Westpac
Strategist Richard Franulovich at Westpac believes the rebound of the greenback could test the 94.00/95.00 area.
Key Quotes
“USD oversold on multiple metrics - heavy short positioning and underdone Fed hike probabilities two notable examples”.
“Fedspeak
over the next couple weeks should err on the hawkish side too,
signalling June is live and that global/financial risks have dissipated,
reminiscent of late March when a palpably more hawkish round of
Fedspeak emerged after that month’s dovish FOMC”.
“USD index could see 94-95 on this bounce over the next few weeks before it peters out and the USD rolls once again”.
“The
Fed is unlikely to ultimately deliver a June hike given the proximity
of the UK referendum vote, US data outside payrolls looks increasingly
unlikely to show a strong bounce in Q2 - softness in Q1 may not be an
artefact of residual seasonality given an absence of inclement weather”.
“China’s
recovery meanwhile seems likely to extend a few more months if past
stimulus packages are anything to go by, a USD negative theme to the
extent it keeps risk appetite supported and commodity prices strong”.
