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USD to trade under pressure due to soft data releases – Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 8, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, suggests that there are signs that US data momentum will soften in coming weeks, keeping pressure on USD in terms of yield spreads and USD should already be lower against major currencies.

    Key Quotes

    “Since the surprisingly soft US Sep jobs data, pricing for a Dec Fed hike has languished under 40% and doesn’t exceed 50% until March 2016.”

    “We have switched to a negative bias on Dollar Index for both the week and month ahead. Later in Q4, we remain optimistic on the US dollar. Westpac’s base case remains a Fed rate rise in Dec, with key officials such as SF Fed’s Williams noting that with the unemployment rate near 5%, payrolls growth can slacken while still tightening the job market.”

    “Dec is also when the ECB will have to review its forecasts, most likely including another downward revision to inflation. The relative growth and yield story should then return to driving sustained USD gains.”
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