USD could struggle to climb further – Westpac

Richard Franulovich, Strategist at Westpac, believes the greenback’s upside to remain somewhat limited.

Key Quotes

“USD still looks challenged here. With Q1 growth now a write off the Fed will want to see at least 2-3 months of stronger data to be sure residual seasonality has once again been the culprit for depressing Q1 growth”.

“That calls into question a June 15 Fed hike, which was always looking dubious given proximity of the June 23 UK EU referendum”.

“Stability in China is another challenge to the USD, via China’s impact on commodity prices and EM capital flow trends”.

“A potentially less dovish sounding Draghi at next week’s ECB press conference probably weighs on the USD too. The DXY has bounced off key support levels but doubt it has the legs to forge materially higher”.