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Oct 26 - 12:55 PM

USD: Scope For Staging A Rally Into Year-End As Liquidity Impulse Tightens - Nordea

By eFXdata  —  Oct 26 - 10:45 AM

Nordea Research flags a scope for USD gains into year on the back of tightening USD liquidity impulse.

"Since Mnuchin and the US Treasury prefunded a huge fiscal deal that is likely not going to materialize on this side of the election, the USD liquidity impulse has taken a beating due to Treasury prefunding / cash hoarding ahead of the fiscal deal," Nordea notes. 

"The USD usually regains its footing after a while when the USD liquidity impulse tightens, alongside weaker risk appetite and flatter yield curves. This could be the case over the next 1-2 months before a (much) better 2021 with continued wide scaled QE alongside a fiscal deal that will allow the US Treasury cash account to drop in size," Nordea adds. 

Source:
Nordea Research/Market Commentary

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