Strategy views: DXY to 95 on a one month horizon? - Westpac

Analysts at Westpac's outlook for the dollar...

Key Quotes:

"Busy calendar in a holiday-shortened week – both ISM surveys, payrolls, FOMC minutes. 

Bias: Not a lot going for the USD right here as a growing coterie of central banks (the ECB, BoC and the BoE this week) signal a clear intent to join the policy normalisation bandwagon. 

Against that the Fed’s plans into year’s end are well discounted – another +25bp hike this year and slowing down reinvestments – and if anything the risks are building for less policy normalisation if inflation remains benign. 

Republican Party struggles over health care reform a foretaste of likely similar struggles on tax cuts, tax reforms or infrastructure. There is a larger disappointment trade for US assets when the realisation dawns that Trump’s reflation policy will be heavily watered down and delayed, but that is a story for late 2017. 

The USD was enjoying a grind higher supported by a hawkish Yellen but the pace and scale of the move was very underwhelming. USD index now risks a run at 95 on a one month horizon."