The Greenback sold off on GDP miss, however holds multi-year support level
The Greenback is struggling to catch a break at the moment, however the USD trade weighted index is now at a level that has broadly supported the Greenback for the last three years. This could provide an area of support and an opportunity for USD shorts to take profit. However, should this break the Dollar’s woes could be compounded. This week we have the US employment report, which has been consistently reporting a tightening labour market; it is our view the labour market will be the eventual source of inflationary pressures in the US. Unemployment is expected to fall further towards 4.3%, which will be the lowest rate since 2001. Locally, the RBA statement will be watched closely after recent speeches have suggested a more dovish tone. They are also likely to express displeasure at the strength of the AUD, and the statement will likely remain consistent with a continued monetary policy stagnation.
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