USD: Recent rise suggest it will prove sticky - Westpac

According to Richard Franulovich, Research Analyst at Westpac, several notable features about the USD’s recent rise suggest it will prove sticky and likely run yet further.

Key Quotes

“1) the velocity of the move has been such that positioning has not kept pace; 2) there is impressive breadth to its recent appreciation; and 3) the latest run up in yields to 3% has a much more “USD friendly” quality to it, coming less from term premium than the earlier new year run up in yields.”

“The bulk of the latest leg-up in yields has come from firming Fed hike expectations. Against that, 70% of the +54bp run up in yields from new year through to their midFeb highs just shy of 3% was attributable to a higher term premium, fiscal/public debt concerns the proximate factor.”