TD Research discusses the USD outlook in light of the recent news that Apple plans to pay $38bln in taxes to the US which has sparked a debate about the FX market implication of the new tax plan.
In that regard, TD believes that the impact of the repatriation is likely a wild card rather than a game-changer for the USD.
"Measurement errors could bias the risks in either direction. However, it is likely the more significant impact comes through Wall rather than Main Street. Equities could benefit from share buybacks and dividends payouts against a more muted growth impact. Indeed, another equity boost could offer tailwinds to global financial conditions, reinforcing the reflation trade and policy normalization outside the US.
For the $, this backdrop would further hinder it - not rescue it," TD argues.
Source: TD Securities Research