USD: Slightly downbeat near term prognosis - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that the US Fed may have declared more forcefully than the markets have been accustomed to lately that it is on the verge of hiking rates but Westpac is not inclined to change its slightly downbeat near term prognosis for the USD.

Key Quotes

“With market pricing for a 14 Dec hike hovering at a relatively elevated 55-60% probability for some time there is not a heck of a lot of fresh potential interest rate support to fuel a meaningful leg up in the USD.

We do not feel that the USD has the wherewithal to make a more concerted run higher in the next few weeks - the ECB does not appear to be in any rush to extend QE, our US data surprise index remains a fair distance from hitting rock bottom levels while the FOMC is unlikely to deliver anything more than a very “dovish” December hike.”