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19 May 2015
Cautious outlook on USD – Westpac
FXStreet (Edinburgh) - A cautious tone keeps prevailing around the US dollar, suggested strategists at Westpac.
Key Quotes
“Little reason to steer away from a cautious USD outlook, sticking with a negative week and month ahead bias”.
“Our DXY fair value model, based on relative growth, yield and CB balance sheet trends, as well as world oil prices suggest the USD remains fundamentally overvalued, while consensus growth prospects for 2015 still look too high at 2.8%, with barely 0.4ppts trimmed from 2014 prospects due to the high USD and the dislocation in the energy patch”.
“Our analysis suggests that these two enduring negatives could easily shave 1ppt from 2015 growth”.
“The PMIs should underwhelm while the minutes may weigh on the USD too, assuming they convey the same sentiments as the statement which was more cautious on the economy”.
“Response to numerically significant resistance at 100.00 has been an impulsive rejection, implying a likely multi-week / month decline, initially towards 89.65/85”.
Key Quotes
“Little reason to steer away from a cautious USD outlook, sticking with a negative week and month ahead bias”.
“Our DXY fair value model, based on relative growth, yield and CB balance sheet trends, as well as world oil prices suggest the USD remains fundamentally overvalued, while consensus growth prospects for 2015 still look too high at 2.8%, with barely 0.4ppts trimmed from 2014 prospects due to the high USD and the dislocation in the energy patch”.
“Our analysis suggests that these two enduring negatives could easily shave 1ppt from 2015 growth”.
“The PMIs should underwhelm while the minutes may weigh on the USD too, assuming they convey the same sentiments as the statement which was more cautious on the economy”.
“Response to numerically significant resistance at 100.00 has been an impulsive rejection, implying a likely multi-week / month decline, initially towards 89.65/85”.