USD: Vulnerable to further near term weakness - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that the USD looks vulnerable to further near term weakness, as marquee releases such as payrolls and both the manufacturing and services ISM reports missed expectations.

Key Quotes

“Our surprise index remains a considerable distance from extreme levels where it typically bottoms out. Sep 21 FOMC hike odds have eased back to 24% but can leak lower still into the FOMC, fuelling yet more USD weakness.

“Low-information” voters tend to tune into Presidential politics post Labor Day holidays and with the polls tightening up “Trump risk” may rear its head in coming weeks. On balance we read Trump risk as a clear negative for the USD – he is a mercantilist at heart and would likely pursue a weak USD policy as part of his trade agenda.”