Tim Riddell, Research Analyst at Westpac, explains that the Westpac data pulse is rebounding as both US yields and USD stabilise after the past few weeks of unwinding Trumptrades.
“Trump’s administration is pulling out all stops to reverse the impression that their election initiatives have failed. The outlining of tax reform proposals, resurrecting repeal of Affordable Care Act, proposing a new Homeland Investment Act, renegotiating NAFTA and a move to pass a spending bill (without Mexican wall funding) have all emerged this week.”
“A positive corporate earnings season has aided stocks. Pessimism over the weakness of 1Q’17 GDP also appears to have been excessive. The Beige Book path of moderate growth fits with the FOMC’s forecasts and so policy should be affirmed next week.”
“Although 1Q GDP could still disappoint, the push in Trump policies and averting a government shutdown should lift USD and push DXY towards 102.”