USD: Less of a safe haven now - ING

According to Chris Turner, global head of strategy at ING, narrative on the US dollar is slowly moving onto its next chapter as the Fed has connected the dots between Trump’s trade war and US business confidence, it seems that any news on increased trade tension is having a diminishing marginal positive impact on the dollar.

Key Quotes

“It seems the market is slowly but surely gaining confidence that the dollar is coming to the end of its eight-year bull run. Here, other banks have joined our view that President Trump might consider direct intervention to weaken the dollar later this year. The dollar also failed to gain any real benefit after a very rare 0.3% month-on-month rise in US core CPI yesterday. Instead, focus on the US fiscal position may be growing.”

“There’s only US PPI today and a Fed speaker (Charles Evans 16CET), but it looks as though the market is confident of a 25 basis point Fed cut on 31 July – especially with what we read as a pretty dovish set of June FOMC minutes. We think the investor dollar mindset has now shifted to ‘sell the rally’. DXY to drift to 96.35/50.”