DXY could slip towards 92.00 – Westpac

According to strategists at Westpac, the greenback could extend its consolidative pattern for the time being and risks a test of the 92.00 handle.

Key Quotes

“Q3 US GDP could print 3%+ as the steep inventory rundown turns course but that will come too late (late Oct) to assuage FOMC concerns about persistently slow growth (3qtrs averaging 1%) and continued weak business investment, certainly that data will be too late to make a case for a 21 Sep FOMC hike”.

“Soft Q2 GDP deals a nearly fatal blow to Sep hike odds yet markets still price in 20% chance of a hike. USD index should retest recent lows near 92 as yet more air leaks out Sep Fed hike expectations. Chair Yellen unlikely to upset markets when she speaks at Jackson Hole 26 Aug”.

“DXY in the middle of a contracting range. Sidelines”.