USD: Risk resilience caps gains – ING

FXStreet Insights Team FXStreet

ING strategist Francesco Pesole notes that despite higher Oil prices and geopolitical uncertainty, the Dollar has only found limited support as resilient US equities and month‑end flows weigh on USD performance. He highlights that high‑beta commodity currencies like the Australian Dollar and Canadian Dollar are currently favored, but warns that once month‑end flows fade, USD gains could accelerate if Gulf negotiations fail to progress.

Risk, flows and FOMC shape USD

"In theory, this should be a favourable environment for the dollar, yet USD has found only limited support so far. We see two reasons. First, US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic."

"That remains a key missing link for a sustained dollar rally; EUR/USD, like many other USD crosses, currently shows a higher beta to global equities than to oil prices or rate differentials. Second, month‑end flows should be acting as a drag on the dollar, given relative US equity outperformance in April."

"Once month‑end flows roll off in the coming days, barring tangible progress in negotiations, we would expect USD gains to accelerate."

"For today, some focus will be on consumer confidence figures, although a wait‑and‑see approach ahead of tomorrow’s FOMC decision and big tech earnings (Alphabet, Microsoft, Amazon and Meta) could keep volatility in USD crosses somewhat contained."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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.

GBP/USD keeps the firm tone above 1.3600

GBP/USD clings to its daily gains, although it gives back some of them and recedes toward the 1.3630-1.3620 band on Thursday. Cable’s uptick comes despite the modest bounce in the Greenback, while investors gear up for key data releases on the UK calendar on Friday.

EUR/USD treads water near 1.1670

EUR/USD gives away all its initial gains and receded to the sub-1.1700 region. The US Dollar’s late recovery has dragged the pair lower, leaving it practically unchanged following the NA session on Thursday. In the meantime, investors gear up for the release of preliminary S&P Global Manufacturing and Services PMIs on both sides of the Atlantic on Friday.

Gold holds above $4,500 as rising bond yields offset reduced Fed hike bets

Gold holds steady above $4,500 during the Asian session on Friday amid a combination of diverging forces. Reduced Fed rate-hike bets keep US Dollar bulls on the back foot and support the non-yielding bullion. However, higher US bond yields, bolstered by inflation risks stemming from volatile oil prices due to the US-Iran standoff, could limit USD losses and cap the commodity. Nevertheless, XAU/USD remains on track to register gains for the third straight week.

CFTC will establish crypto rules if Congress stalls CLARITY Act

Commodity Futures Trading Commission (CFTC) Chairman Michael Selig said the agency is prepared to use its existing authority to establish a regulatory framework for crypto markets if Congress fails to pass the Digital Asset Market Clarity (CLARITY) Act.

$40 trillion debt black hole: Is a financial crisis coming?

The United States is closing in on a milestone that would have been almost unimaginable not long ago: $40 trillion in national debt. That staggering figure framed the latest episode of the Money Metals Midweek Memo, as host Mike Maharrey examined what he calls the economy’s “debt black hole” and zeroed in on a relatively obscure corner of the financial system that could become a much bigger problem: the $1.4 trillion private credit market.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.