Dollar looks vulnerable to start Q4 – BBH

Research Team at BBH, notes that the US dollar fell against most of the major currencies in Q3 and looks vulnerable as it enters the Q4.

Key Quotes

“The dollar rose against three major currencies.  Sterling cannot get out of its own way, even though the economic data has been mostly better than expected.  Sterling lost 2.5% in Q3 after a 7.3% drop in Q2.  The Swedish krona fell 1.5% in Q3 after falling 4.0% in Q2.  The central bank is insisting on an aggressively easy monetary policy despite solid growth and rising price pressures.  The Canadian dollar decoupled from the other dollar-bloc currencies by slipping 1.4% in Q2.  The drag from oil prices and mostly disappointing economic data weighed on the Loonie, which typically underperforms on the crosses in a soft US dollar environment.

The most important technical consideration in the Dollar Index is the trendline connecting the early-May low, the late-June low, a couple of lows from the second half of August, the early September low.  That trendline is just below 95.00 at the start of next week and is rising about one tick a day.  The initial target on a break is the September low near 94.45.  Resistance is seen around 96.00.  The ceiling has frayed but not on sustained basis.”