USD steadies, undertone remains bearish – Scotiabank
|The US Dollar (USD) is tracking a little higher overall, consolidating the soft tone seen over the past few sessions as the Dollar Index (DXY) losses hold near recent lows, Scotiabank's Chief FX Strategist Shaun Osborne notes.
USD consolidates but remains prone to losses on tariff,
"Monday’s 'sell America' trade moderated over the course of yesterday’s session as the USD and Treasurys softened while stocks steadied. Stock futures are lower this morning while bonds have firmed a little. Overall USD sentiment has stabilized but, based on risk reversal pricing, remains bearish. The USD will struggle to improve while investors consider the implications of the president’s tax bill and tariff/trade uncertainty persists. Gold is trading a little lower today but continues to trade with a generally bullish technical bias."
"US ISM data yesterday reflected slower overall activity and a weaker than expected headline index of 48.5 in May (from 48.7 in April), implying a third month of contraction in the sector. The key sub-indices were weak but still better than expected, however. New Orders rose to 47.6 (47.2) while Employment nudged up to 46.8 (46.5). The shocker was the Import index which plunged a little more than seven points in the month to 39.9, another reflection of the sharp fall in trade (after last week’s preliminary April trade data) amid tariff headwinds."
"The hard data have really yet to show any impact from tariffs and—generally—positive US data surprises since mid-April suggest that either markets have overestimated their impact at this point, or the US economy is more resilient. You can add positive US economic data surprises to the list of things (rising yields, wider spreads) that have not helped the USD since 'Liberation Day'. Still, its about now that estimates (allowing for distribution and logistics lags) suggested the sharp fall off in US/ China trade should start being felt a bit more obviously in the US economy. Factory Orders and Jolts data could weigh on the USD if the data disappoint. The Fed’s Goolsbee, Cook and Logan (a non-voter) are speaking today. Australia releases Q1 GDP at 21.30ET."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.