TD Securities projects a downturn for the USD in the near-term, emphasizing a relative calm in risk events. A series of economic indicators, including payroll numbers, ISM data, and other economic reports, signal a moderation in the US economy's growth, spurring a rally in Treasuries and a decline in the USD's strength.
Economic Data Indicating Slowdown: Recent data such as payrolls, ADP employment, JOLTS job openings, and durable goods orders collectively suggest an easing in the US economy's expansion pace.
Bonds and Currencies React: These economic signs have sparked a significant rally in US Treasury bonds and catalyzed a depreciation of the USD, particularly benefiting risk-sensitive, high beta currencies.
Shift in USD Dynamics: TD Securities identifies a clear regime shift for the USD, pointing towards a trend reversal from its previously robust position.
TD Securities anticipates the 'USD lower' trend to persist, with fewer risk events to disrupt this movement. The observed moderation in key economic indicators underpins a notable regime change, hinting at a reversal of the USD's fortunes, with potentially far-reaching implications for global currency markets.