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USD: Vulnerable to near term downside - Westpac

FXStreet (Delhi) – Imre Speizer, Senior Markets Strategist at Westpac, suggests that the US dollar is vulnerable to yet more downside near term, the currency looking overvalued vis-à-vis recent developments in yield spreads and various measures of risk premia.

Key Quotes

“That, along with near term downside risks to the US data emanating from the recent tightening in financial conditions flag a rocky near term USD outlook.”

“The longer term uptrend in the USD, though, likely remains intact. Soft data trends in the near term will be a challenge for the USD but 2016 should still see a relatively healthier US growth picture emerge than many parts of the world.”

“A heavy slate of data is due this week, including the first read on Oct activity trends from the Philly and Empire business surveys as well as the Michigan prelim consumer sentiment survey. Sep PPI, CPI and IP data are also due as is the NFIB small business survey. Fedspeak hits the newswires every day, Lockhart, Evans, Brainard, Bullard, Dudley and Mester all on tap. The Beige Book is out on Wednesday.”

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