USD 'sidelined for the time being … to remain supported on dips'
A snippet from ING overnight on the US dollar
- side-lined for the time being
Undoubtedly investors have backed fiscally-powered US out-performance and are sitting long dollars and long US equities
There's a case to be made (as DoubleLine's Jeff Gundlach does) that position-adjustment could see the dollar lower into year-end, although there are quite a few challenges ahead.
- escalating trade tensions with China
- strong US activity data
- hawkish Fed
- higher energy prices
- Unless Trump backs down on protectionism or the Fed starts discussing the end of the tightening cycle (both look unlikely at this stage), we'd expect USD to remain supported on dips.
After this note we did see some softening from the US on China (perhaps):