This a snippet from an ING client note out overnight on China, the US, the Fed, and … well, read on:
another round of US tariffs against China are going into effect on Friday - likely prompting an immediate Chinese response
- Not until polls turn dramatically against Trump (driven by lower equities or activity data) should one expect Trump to change course.
Also of note was the IMF's Article IV on the US released yesterday
- Despite the understandable focus on protectionism, the IMF's primary concern was that the fiscal stimulus would trigger an inflation break-out and the Fed would have to raise the policy rate quicker.
- Indeed the IMF pencils in a 3.50-75% Fed Funds target for 2020!
It's hard to be bearish on the dollar in the current environment and ahead of what should be some good jobs data later this week, we expect DXY to find good support ahead of the 94.20 area.
(bolding mine)
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I expect if Fed hike quicker, it won't be for the reasons everyone thinks ….
