USD is going largely unrewarded - Westpac

Research Team at Westpac, suggests that the reassuring US data (ISM and payrolls) is boosting risk appetite moreso than Fed hike expectations and as such the USD is going largely unrewarded.

Key Quotes

“Suspect that will not change until the Fed starts to lean more hawkishly. Earliest opportunity for a more forceful message will be the July 27 FOMC. Officials will be relieved Brexit has not left any lasting damage on US financial conditions and they will be reassured by the strong June payrolls too, setting the stage for a slight hawkish tweak to the Fed’s messaging. Until then USD index risks a pullback to 94-95 as likely yet more decent data (retail sales, July PMIs) does more for risk appetite than Fed hike expectations.

Technical: Resistance at 96.70 holding and momentum about to turn lower.”