18 Jun 2015
Door remains open for USD upside – Westpac
FXStreet (Edinburgh) - In the opinion of Strategist Richard Franulovich at Westpac, the fundamentals for further appreciation in the greenback remains intact.
Key Quotes
“The USD may be trading with a soft tone post-FOMC but the milieu looks more supportive with each passing day:”
“1) the cadence of the US data should continue to improve as signaled by the formal trough in our US data surprise index;”
“2) the EUR supportive bund sell-off appears to have run its course, certainly historical analogs such as the 2003 JGB sell-off and the 2013 US treasury taper tantrum suggest we have finally approached the minimum time frame for thinking about some moderation in the pace of the sell-off with yields typically stabilising after rising 100-120bp two-three months after they bottomed; and”
“3) EUR/USD has plenty of downside potential if/when Greek sovereign risk premium is more thoroughly discounted by currency markets as is increasingly the case in vol and fixed income markets across Europe”.
Key Quotes
“The USD may be trading with a soft tone post-FOMC but the milieu looks more supportive with each passing day:”
“1) the cadence of the US data should continue to improve as signaled by the formal trough in our US data surprise index;”
“2) the EUR supportive bund sell-off appears to have run its course, certainly historical analogs such as the 2003 JGB sell-off and the 2013 US treasury taper tantrum suggest we have finally approached the minimum time frame for thinking about some moderation in the pace of the sell-off with yields typically stabilising after rising 100-120bp two-three months after they bottomed; and”
“3) EUR/USD has plenty of downside potential if/when Greek sovereign risk premium is more thoroughly discounted by currency markets as is increasingly the case in vol and fixed income markets across Europe”.