USD extending post-Fed gains as markets focus on US/UK trade deal – Scotiabank

The US Dollar (USD) is entering Thursday’s NA session with broad strength against all of the G10 currencies and is seeing notable gains vs. Japanese Yen (JPY), Swiss Franc (CHF), Canadian Dollar (CAD), and New Zealand Dollar (NZD), Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD strengthening broadly vs. G10

"The focus is on trade and confirmation of the US/UK trade deal that is set to be unveiled in the oval office at 10am ET. The USD is extending gains that had begun toward the end of Fed Chair Powell’s post-FOMC press conference late Wednesday, as he communicated a desire to be patient in assessing the risks to the outlook. Powell emphasized that low inflation and a solid labor market allow the FOMC to wait as they formulate their policy response to trade-driven changes in the economy."

"The broader tone is one of risk appetite with strength across Asian and European equity indices and solid gains in US equity futures. The US 10Y continues to trade around the 4.30% level and the 2Y has yet to break away from congestion around 3.80%. Oil prices are finding renewed support as they continue to recover from their recent OPEC-driven decline while copper appears to be showing some signs of near-term stabilization following Wednesday’s notable drop. Gold is soft and appears vulnerable to near-term weakness in this environment of renewed USD strength, as technicals offer a double top in the $3420s implying a measured move toward $3050/oz." "Thursday’s calendar is limited to second- and third-tier US releases with jobless claims, unit labor costs, and productivity at 8:30am ET followed by wholesale inventories at 10am ET. The NY Fed’s inflation expectations release may garner some attention at 11am. There are no Fed speakers scheduled for Thursday, however Friday’s calendar is filled with 7 speaking engagements including several members of the Board of Governors."