DXY could extend the upside to 97.00 – Westpac

According to strategists at Westpac, the US Dollar Index (DXY) could see its upside testing the 97.00 handle.

Key Quotes

“June and July Fed hike odds sit at 34% and 54% respectively. While our base case is for the Fed to take a pass at both meetings - Chair Yellen's concerns about asymmetric policy risks and Brainard's caution around global risks should sway the Board - those Fed hike odds are nevertheless apt to drift higher in coming days, not least because Fedspeak is likely to hammer home the message that June is a live option”.

“June Fed hike odds can rise toward 40-45% before stabilising and the USD index can make a run at 97.0”.

“Would shift to the sidelines in the first week of June though - weak regional PMIs flag risks of a sub-50 ISM while 40k striking Verizon workers and auto supply disruptions caused by Japan's Kumamoto earthquake could produce an underwhelming payrolls”.