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- USD: This may be the start of the long-awaited cyclical decline – ING
USD: This may be the start of the long-awaited cyclical decline – ING
The downside surprise in US June CPI inflation has seen the Dollar drop to new lows for the year. Economists at ING analyze USD outlook.
The start of something
For the big Dollar trend, this may be the start of the long-awaited cyclical decline. There are parallels to the Dollar sell-off last November and December (when it fell 8% in two months), but the difference now is; i) positioning, where speculators are not as heavily long dollars as they were last October, and ii) the China and European growth stories do not seem due as much of a re-rating as they enjoyed last November.
That said, we prefer to run with the Dollar bearish story for the time being, where DXY should press big psychological support at 100.00. The next target would be 99.00 on a breakout.
For today, look out for US June PPI and the weekly initial claims number. A further decline in PPI and a rise in claims could see Dollar losses extend.
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