USD has probably made a cycle low - Westpac
The US dollar’ has stalled during the past week but its uptrend since early September remains intact, according to Imre Speizer, Research Analyst at Westpac.
“Speculative positioning, too, appears to have bottomed. We remain broadly upbeat on USD. US data momentum is very strong, our data pulse model at a four year high. Financial conditions are very easy. And market discussion should move beyond a Dec Fed hike (almost 100% priced) to how many hikes there will be in 2018.”
“3 months ahead: Beyond a near term stumble, the USD remains in good shape. Accommodative financial conditions point to yet more upside surprises in coming months while yield spreads should gravitate in the USD’s favour as the Fed Funds rate extends its glacial ascent above other countries’ key cash rates and as the Fed’s balance sheet shrinks relative to the ECB and the BoJ’s balance sheets.”