G10FX: Headwinds For USD On Prospects Of C-Banks Slow Rotation Into EUR & JPY - TD

TD Research discusses that latest headlines related to China’s USTs holdings, and thinks that such headline should be taken with 'a pinch of salt'.

"For one, the headlines lack context and appear overhyped. We suspect the motivations of the headlines fall in the political brinksmanship category, with the Chinese sending a warning shot to US policymakers, as Trump gets more ambitious on trade. 

Still, the headlines come at a time that we see the prospects of a slow rotation into other reserve currencies like the EUR and JPY. This is partly linked to rebalancing efforts as CBs deploy their capital into other sources of value, which should accelerate headwinds for the $," TD argues. 

Source: TD Securities Research