FX alert: the US currency watchlist widens, but the guillotine stays sheathed—for now

FX Treasury Report Primer

Call it a scarlet warning wrapped in bureaucratic speak, but the U.S. Treasury’s upcoming FX Report might just light a few fuses across the macro landscape, even if it stops short of dropping the manipulator hammer. The June edition won’t tag anyone with the scarlet “M,” but the monitoring list is about to expand—likely dragging in Ireland and Switzerland for a front-row seat under Washington’s currency microscope.

Now, before anyone gets trigger-happy on USD crosses, remember: this report is a policy scalpel, not a wrecking ball—unless the Trump camp decides to load it up into one. Under Trump 1.0, the FX Report morphed from an academic yawner into a loaded policy bazooka. China got hit without clearing all the hurdles. Rules? Optional. Narrative? King.

Fast forward to today: Trump’s second-term trade doctrine is not all about flashy tariffs—it’s about playing chess with currency clauses and geopolitical IOUs. And that means this report, while procedural on the surface, could be the opening move in a broader game of Mar-a-Lago Accord. Think of it as the macro equivalent of showing your cards at the poker table—not to play them, but to signal you’re ready to raise the stakes.

The Criteria Game: Two Strikes, You're Watched

Let’s break down the Treasury’s three-strikes rule:

1. Bilateral goods/services surplus with the U.S. > $15B

2. Current account surplus > 3% of GDP

3. Persistent FX purchases > 2% of GDP over 12 months

Meet two, and you're on the watchlist. Meet all three, and you're theoretically tagged a manipulator. But remember: in Trump’s playbook, the ref can move the goalposts mid-game.

Switzerland is the main event this round. The SNB has long danced on the intervention line—leaning in just enough to tame the franc without spooking Washington. But now, with the U.S. sharpening its focus, even mild-mannered Switzerland could find itself boxed in. The FX market’s whisper network already suspects the SNB may go for a surprise 50bp cut on June 19—not because the economy is screaming for one, but because the Treasury report could make further intervention politically toxic.

A manipulator tag would turn the SNB’s toolbox into a landmine. No more stealth franc weakening. Rate cuts, then, become the only arrow left in the quiver. And with 31bp already priced in, front-loading that cut before the Treasury report drops could front-run the fallout.

Ireland? That’s a message to the EU.

If the U.S. slaps both Germany and Ireland onto the list, it’s less about FX imbalance and more about setting up future leverage in transatlantic trade talks. Especially if Trump’s trade hawks want to tilt the table before entering another “deal phase” with Brussels.

Watch What’s Not Said

The most powerful part of this report won’t be the countries named—it’ll be the fine print on what the Treasury could change. If they start hinting at rolling back the 2021 relaxed thresholds, traders should buckle up. That’s the signal this isn’t just a monitoring list—it’s a staging ground.

Lower the current account bar to 2% or shorten the FX intervention window from 8 months to 6, and suddenly a whole new crew of economies gets pulled into the blast radius.

This would be particularly dicey for Asia. Korea and Taiwan have already seen sharp currency rallies on rumours that any Mar-a-Lago Accord-style pact will include soft FX appreciation clauses. A stricter Treasury read-through only reinforces that tail risk.

Bottom Line:
The June Treasury FX report won’t light up the screen with a manipulator headline, but the smoke signals are plenty. Switzerland is walking the tightrope between currency control and diplomatic compliance, and markets are sniffing out a pre-emptive SNB cut. Ireland’s addition may fly under the FX radar, but don’t underestimate its political weight. The real game? Trump’s team laying the legal groundwork to turn FX reports into weapons-grade negotiation tools.

If this report hits before June 19, the Swiss franc may blink. If the Trump team rewrites the rulebook later this year, all of Asia FX could get pulled into the storm. Either way, the Treasury just handed us the first page of what could become a whole new currency war playbook.

Mar-a-Lago Accord: Blueprint or Bluff? A Trader’s Read on the Dollar Devaluation Doctrine

The financial press has been abuzz with whispers of a new grand strategy brewing in Washington—one that marries currency policy, trade leverage, and geopolitical realignment into a single playbook. At the center of this plan is what’s being dubbed the "Mar-a-Lago Accord," a not-so-subtle echo of the Plaza Accord, but with a 21st-century edge and a distinctly Trumpian flavor. Spearheaded intellectually by Stephen Miran, Trump’s newly appointed CEA chair, the working thesis is simple but incendiary: America’s trade deficit isn’t a fiscal excess problem—it’s a currency mispricing problem. The dollar, supported by decades of inelastic demand for U.S. Treasuries, is floating well above its trade equilibrium. And that, according to the blueprint, must be corrected—forcefully, if necessary.

The mechanics are clear. Trading partners would first face aggressive tariffs designed to generate leverage. Only then would Washington extend the olive branch—a lower-tariff regime in exchange for coordinated dollar selling and FX reserve rebalancing. In short, sell dollars, term out Treasury holdings (possibly to century bonds), and align policy to weaken the greenback in an orderly, negotiated fashion. This is the “multilateral” path of the Mar-a-Lago Accord, one that ostensibly targets China, the eurozone, and Japan, but pragmatically leans on countries more likely to comply, such as the UK, Canada, Mexico, and possibly Japan.

But beneath the façade of diplomacy lies a more menacing alternative: unilateral enforcement. If allies balk, the U.S. could impose a ‘user fee’ on official Treasury holdings—a stealth tax on reserve managers—or expand the Exchange Stabilization Fund to counter FX flows. One even more extreme option raised in the essay: printing dollars to buy foreign debt. While this would trigger seismic inflation and risk a credibility crisis for the Fed, the very inclusion of such tools underscores the breadth of the strategic canvas.

For the U.S. Treasury market, the implications are stark. Any attempt to coerce foreign holders into century bonds—particularly via forced swaps—would resemble a technical default, triggering rating downgrades and potentially ending Treasuries’ benchmark status. In a world where conservative reserve managers prize stability over yield, such a move would accelerate a rotation into high-grade corporates, flipping the conventional yield curve and inviting long-term consequences for U.S. debt markets.

Importantly, the blueprint emphasizes sequencing. Tariffs must come first to build leverage; only then can a credible currency accord be offered. The recent rollout of reciprocal tariff buckets, categorized by trade imbalance and defense contribution, fits neatly into this strategy. It’s not random trade warfare—it’s a setup for broader concessions. And with Powell’s Fed term ending in 2026, the administration may be banking on a more compliant central bank to backstop any fallout in the bond market.

For the dollar, the path is nonlinear. Near-term strength would be tolerated—even welcomed—to suppress the inflation burst from tariff shocks. But the endgame, if executed, is a sharp devaluation. The yen, undervalued and defensive, could rally 20–25% in such a scenario, while USD loses its luster as the world's neutral reserve anchor. Should this strategy gain traction, FX volatility would surge, and global capital would seek out new safe havens.

Europe, meanwhile, stands at a potential crossroads. If dollar dominance is finally challenged, the eurozone has a narrow window to evolve. Issuing more joint debt and completing Capital Markets Union could elevate the euro’s reserve appeal, but bureaucratic inertia remains the biggest hurdle. More likely, Europe remains a spectator to the realignment.

Ultimately, the Mar-a-Lago Accord isn’t just about currency values—it’s a systemic pivot in how Washington wants the world to engage with the U.S. consumer, its capital markets, and its military umbrella. Allies may be strong-armed into financial alignment, while adversaries face punitive decoupling. In market terms, this means higher volatility, fractured liquidity, repriced sovereign risk, and a rethinking of long-held assumptions about what constitutes a “safe” asset. Traders shouldn’t dismiss it as political posturing. This could very well be the opening gambit of a new era in global macro.