Credit Agricole CIB FX Strategy Research notes that after a slow start to the week, the US economic calendar picks up only slightly on Tuesday with the release of the small business confidence and wholesale inventory data.
“More often than not this year a light data calendar has been consistent with a weaker USD. However, this week the dollar is enjoying a positive start particularly against the ultra-low yielders JPY and CHF that we identified as the laggards of the ‘convergence’ trade, i.e. currencies were the central banks not joining the hawkish chorus.
On Tuesday, Fed Governor Brainard will give a speech on balance sheet normalization so any hints on whether tapering could begin in September will be watched closely,” CACIB adds.
CACIB remains long USD against a basket of JPY and CHF.
Source: Credit Agricole CIB Research
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