With The Ugly DXY Break, Is The Trump Trade Over?
The failure of Trump-care was the latest blow to the US dollar. The post-elections rally is unwinding. What’s next? Here are two opinions:
Here is their view, courtesy of eFXnews:
USD: Ugly Break Of DXY; What’s Next? SocGen
Societe Generale FX Strategy Research notes that the break of 99 in DXY is ‘ugly’ pointing to a break of 110 in USD/JPY which seems inevitable.
Elsewhere, SocGen argues that EUR/USD rally isn’t only about the USD setback following the failure to pass the Healthcare Bill noticing that better European economic data, German voters voting for the status quo and a lack of disquiet about the French elections all allow post November 8 moves to be unwound.
SocGen also stays bullish EUR/GBP arguing that real yields suggest that sterling is vulnerable, and positioning data confirm the market is very short.
USD: Trump Trade On The Ropes; How To Position? – TD
The Trump trade remains on the ropes after last week’s failed attempt to repeal Obamacare, notes TD Research.
Such a setback, according to TD, argues that the USD has probably already seen the highs for this cycle.
“The USD is trailing levels implied from rate spreads so we do see the potential for this correlation to pickup near-term leading to a squeeze in FX,” TD adds.
In that regard, TD argues that such a shift to Tax reform could help the USD consolidate over the coming days but TD looks to fade these bounces over the next month.
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