USD limps into the weekend – Scotiabank

FXStreet Insights Team FXStreet

The US Dollar (USD) is limping into the end of the week and the end of the month. Intraday trends across the major currencies are mixed but the Dollar Index (DXY) itself is still tracking a little lower overall on the day for a (so far) fifth consecutive daily drop. Stocks are positive, with the S&P 500 a point of so off the February high amid optimism on trade talks, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD trades mixed to lower

"Commerce Sec. Lutnick said a US/China trade 'framework' agreement was signed two days ago and other deals would follow shortly but an arrangement with Europe might take more time. The USD is unimpressed. The litany of headwinds for the USD—the White House potentially meddling in Fed policy, near-term risks tilting towards more Fed easing, worries about the impact of US fiscal policy, portfolio outflows because of all of the above, bearish USD technicals, negative USD seasonal trends and (more immediately) chatter of negative month-end USD flows—rather suggest a difficult summer ahead for the USD.

"The minor rebound in the USD amid the flare up of Middle East tensions perhaps gave investors a sense that the USD slide was slowing or even reversing. BBDXY risk reversals strengthened but have since repriced to reflect a renewed bid for dollar puts over calls. We think risks are tilted squarely towards more immediate and significant dollar losses. The FOMC consensus remains cool on July but speculation of rate cuts will intensify if the run of US data continues to disappoint. Today’s data reports are expected to reflect mild gains in both Personal Income and Spending for May."

"Core PCE data is expected to rise 0.1% in the month but strengthen modestly to 2.6% in the year. Final Michigan confidence data may include a mild upward revision to still very elevated consumer expectations for inflation in the next 12 months. Intraday trends suggest a consolidation in the DXY ahead of renewed losses (bearish on a break under support at 97.00). Resistance is 97.45 and (stronger at 97.65). We continue to think the DXY is heading for a drop to the 90/95 range in the coming months."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD extends its optimism past 1.1900

EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

XRP struggles around $1.40 despite institutional inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.