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#1 29-04-2019 08:42:05

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USD: Is this the start of a new uptrend for the dollar? (Westpac)

USD: Is this the start of a new uptrend for the dollar? (Westpac)

Richard Franulovich, Head of Currency Strategies at Westpac, pointed out that key levels of a range of G10 currencies, including the EUR, JPY, AUD, NZD and CAD, are currently being tested.

"Contrasting data sets on the health of the global economy seem to be responsible for most of the recent volatility and anxiety.

The strong evolution of the positive upside risk sentiment to a negative disappointment on the global economy seems to be the main factor behind the sharp decline in several currencies in recent days.

Our best assumption is that recent developments are more in line with a redefinition of new (weaker) currency ranges rather than the beginning of a significant new multi-week trend that would significantly support the USD. However, this does not preclude a test of 1.10 on the EUR/USD and a DXY at 100. This seems rather likely in the short term, especially if S&P downgrades Italy's sovereign rating today (currently at BBB, two notches above junk). But beyond that, it is not certain that the USD is about to embark on another significant appreciation.

At least some of the USD's gains could reflect pockets of month-end funding pressures that are also expected to normalise over the next month.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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