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1 week ago | 
think.ing.com | František Táborský |Francesco Pesole |Chris Turner
We have published our monthly FX update – FX Talking: "You wanted a weaker dollar"The next FX Daily will be published on Tuesday, 22 April. USD: Powell rejects rescuer role Fed Chair Jerome Powell delivered the clearest message since “liberation day” yesterday, which was unquestionably hawkish. Markets had leaned towards the Trump-backed narrative that the Fed would come to the rescue with rate cuts despite inflation uncertainty.
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1 week ago | 
think.ing.com | Chris Turner |Francesco Pesole |František Táborský
Traded levels of FX volatility have edged down a little, but they're not collapsing. And equally, the dollar has been slow to reclaim any of its recent losses even as equity markets have stabilised. Looking back at last week, we think most asset classes reacted as they should have to the trade shock – apart from Treasuries. Here, as the dust settles, it looks as though we've seen an unwind of highly leveraged long positions as hedge funds wagered on reforms to the Supplementary Leverage Ratio.
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1 week ago | 
think.ing.com | Francesco Pesole |František Táborský |Chris Turner
USD: Still downside risks US equities and bonds had a good Monday, but considering the width of Trump’s announced exemptions from China’s tariffs, the move is well short of exceptional. Markets retain a substantial risk premium attached to US assets, including the dollar.
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1 week ago | 
think.ing.com | František Táborský
Given higher inflation and the fragility of markets, we can say that the global shock is not strong enough to change the minds of the National Bank of Hungary (NBH) and the National Bank of Romania (NBR) right now. That's why we continue to see no cuts in Hungary this year and 50bp in Romania in the second half of the year.
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1 week ago | 
think.ing.com | Chris Turner |František Táborský |Francesco Pesole
EUR/USD and USD/JPY briefly witnessed one week implied volatility trading at 20% late last week. That's extreme, and – barring a global financial crisis – those levels of volatility don't typically last for long. Thankfully, the financial plumbing system seems ok so far, and it's worth taking a quick look at what happened last week. I think it's fair, as most do, to call US tariff policy 'chaotic'.
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2 weeks ago | 
think.ing.com | Francesco Pesole |František Táborský |Chris Turner
USD: The new high-beta in town A mad week for markets is ending with heavy losses for the dollar. The FX scorecard is speaking volumes; in G10, only the illiquid Norwegian krone is flat against the dollar since last Friday. Gains stretch from the “modest” 0.8% of the pound, to 2-3% of the euro, Australian dollar and New Zealand dollar and 4.5% of the Swiss franc. The question of a potential dollar confidence crisis has now been definitively answered – we are experiencing one in full force.
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2 weeks ago | 
think.ing.com | Chris Turner |František Táborský |Francesco Pesole
USD: Damage has been done The clean take-away from the pause in the worst of the tariffs was a re-assessment of global trade prospects on the view that perhaps tariffs were more transactional after all, and US equity losses are indeed proving a brake on the President's desires to rewire the global trading systems. The big winners yesterday in G10 were the commodity currencies – especially those with an Asian link such as the Australian and New Zealand dollar.
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2 weeks ago | 
think.ing.com | Francesco Pesole |František Táborský |Chris Turner
USD: Sell America? Just when the dollar seemed to be regaining some confidence, the US decision to go ahead with a tariff hike of 104% on China (alongside all other tariffs) led to a rotation away from the greenback. With risk sentiment deteriorating throughout the US session, the other safe havens CHF and JPY remain in a strong position despite another rise in global sovereign yields.
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2 weeks ago | 
think.ing.com | Francesco Pesole |František Táborský |Lynn Song |Chris Turner
USD: Wild moves continue Equity volatility has remained very high and was joined by a selloff in bonds yesterday. After a very weak open, US equities spiked into positive territory on the back of an unconfirmed headline suggesting a 90-day pause in tariffs. Trump quickly labelled it as “fake news” and actually threatened an additional 50% tariff on China if Beijing doesn’t lift retaliatory duties. The S&P closed only marginally lower after a rollercoaster ride.
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2 weeks ago | 
think.ing.com | Chris Turner |František Táborský |Francesco Pesole
USD: Too much baggage Weekend press reports and TV interviews suggest US President Donald Trump is not yet ready to be swayed from his mission to reset the global trading system. Asian equities are off 6-10%, and this global trade war is proving the great leveller for global interest rates, where market interest rates are converging lower. Very much in focus is the Federal Reserve. The market now prices 110bp of Fed cuts this year and a low point for the easing cycle down at 3.00% next year.
