In the view of strategists at Westpac, the perspective for the greenback remains constructive in the longer term.
“Short term USD index probably has further to run, if only because momentum is on its side after bouncing off very important technical support levels around 94”.
“But, the atmospherics won’t necessarily be that appealing with the Fed likely to slightly downgrade economic conditions in their statement, the Philly and Empire surveys warning of downside risk to this and next week's PMIs and the more accurate Atlanta Fed nowcast point to a sub-1% advance Q3 GDP vs consensus at 1.5%”.
“Our US data surprise index has further to fall before it hits rock bottom levels too. US debt ceiling risks should come the fore into 3 Nov and if anything USD index a short term opportunistic sell into 96 though we remain fundamentally constructive on USD prospects in 2016”.