The news last night that the US and China would begin formal commercial conversations on May 10 and 11 to display the tariff war saw the dollar briefly increase 0.4/0.5%. Remember that in April, the defensive yen and the Swiss Franco were the great beneficiaries of the ‘reciprocal’ tariffs and the massive uniform sale in the US assets markets in theory, then, the unwinding should see the USD/JPY and the USD/CHF lead the recovery. Despite the good recovery in US actions, there still seems to be a sensation of hangover in currency and bond markets, says Chris Turner, FX Analyst of ING.
The DXY can return to 99.25 in quiet markets
“For today, we see two important US tickets in the history of the dollar. The first is the testimony of the Secretary of the Treasury, Scott Besent, before the Chamber on the ‘State of the International Financial System’. Presumably, will argue that the US bond markets are working in an orderly manner and will probably repeat the mantra that Washington maintains a strong dollar policy. If currency agreements are part of the commercial negotiations that are currently being carried out with 17 other commercial partners.
“We also have the FOMC meeting and the press conference of President Powell tonight. We doubt that this turns out to be a great promoter of the market, since the Fed continues to resist the presidential pressure to cut rates. It seems that the market is sufficiently comfortable waiting for the next cut of fees of the Fed in July, while also waiting for the hard data to determine how deep Next Fed flexibility cycle, again wondering why the dollar is not working better. “
“The DXY stopped last week exactly where we should have done it if we are seeing a weak bass market correction. We imagine that there are many protective purchase orders over 101.00 now. But for the moment, the action of the DXY price has been poor and a setback to 99.25 in quiet markets will confirm that the dollar is fighting to shake the risk premium associated with the uncertainty in the policy United States.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
