František Táborský

1 week ago | think.ing.com | Francesco Pesole |František Táborský

USD: Still upside risks The two major US macro events yesterday (the FOMC and TIC data) left very few marks on FX. As discussed in our Fed review, markets are understandably attaching limited value to dot plot projections given the high uncertainty of the tariff impact and recent oil volatility. And while keeping two rate cuts in the 2025 median projection may seem moderately dovish, the Fed sounded less concerned about growth and unemployment.

1 week ago | think.ing.com | Francesco Pesole |František Táborský

The combination of rising geopolitical risk and oil prices has temporarily re-established some safe-haven appeal for the dollar. Yesterday’s USD jump was likely exacerbated by some positioning squeeze, and triggered by another leg higher in oil prices as Israel intensified its strikes on Tehran, and speculation about the US joining the attack flared up. Should such speculation prove correct, the upside risks for oil could increase further, opening up fresh upside room for the dollar.

1 week ago | think.ing.com | František Táborský |Francesco Pesole |Chris Turner

USD: Trade versus geopolitical news The situation in Israel and Iran has shown few signs of de-escalation, and while that is offering intermittent support to the dollar, it has so far failed to generate a major rebound in the greenback. The main geopolitics-FX channel remains oil, whose price action suggests markets believe the worst of the impact may be past us.

1 week ago | think.ing.com | Francesco Pesole |František Táborský

This was always meant to be a very busy week for markets, as a few key central bank meetings – including the Federal Reserve's – were set to refresh the market understanding of policymakers’ stance on the inflation-growth balance in the second month of global US protectionism. But as we know, geopolitical developments have stormed into the picture, and the implications of the Middle East crisis for energy markets can easily spill over into central banks’ inflation assessments.

2 weeks ago | think.ing.com | Francesco Pesole |František Táborský |Chris Turner

The dollar is stronger across the board this morning after Israel attacked Iran's nuclear facilities. The main transmission channel from this specific geopolitical risk and FX is the price of oil, which has rallied around 8% since the Israeli strike. In other conditions, the DXY rally would likely be much larger than the roughly 0.75% rebound from the overnight lows we have seen so far, because the dollar would also benefit from the negative shock in equities and bonds.