USD: Medium term outlook constructive - Westpac

Medium term USD outlook constructive even as consensus/positioning suggest the USD is very well owned, suggests Research Team at Westpac.

Key Quotes

“Another HIA-style repatriation of overseas earnings, a more hawkish Fed as Trump fills key vacancies and a rolling run of 2017 European political risks (Dutch, German and French elections) all set to sustain USD strength. Near term the USD risks a pullback - the ECB unlikely to over deliver on a QE extension, stronger data there and 12mth highs in EUR 5y5y inflation swaps argue against a dovish surprise, while a Dec 14 Dec Fed hike is fully priced and our US data surprise index suggests that all the good news is priced in.”