USD: Good bet - Westpac

In view of Richard Franulovich, head of FX strategy at Westpac, USD seems to be a good bet here.

Key Quotes

“Both recession and Fed easing risk (-18bp by Dec 19 and -50bp by Dec 20) are overstated; financial conditions have by and large reversed the dramatic tightening from late last year and all the bad news appears to be in the rear view mirror, judging by the depressed levels in our US data surprise index. Certainly job openings and surveys point to a bounce back in March payrolls after last month’s steep slowing to +20k.”

“Prospects for a US-China trade détente appear to be firming once again, with officials on both sides touting the latest progress. That likely produces some kneejerk USD selling via stronger risk appetite but it may prove short-lived if any deal includes a dramatic ramping up of Chinese purchases of US goods that flatters the US trade and national accounts in the short run.”

“DXY admittedly has failed at the top of its broad six month 95-98 range but risks still seem skewed to higher USD levels near term.”