Dovish momentum re-emerging – ING

Dangers stay skewed to the draw back for DXY

“The USD OIS 2Y swap fee has adjusted 10bp decrease from the three.8% peak, however doesn’t appear to be taking the dovish alerts from information at face worth given the tariff distortion, and pricing for a Fed minimize earlier than September stays under 50%. The greenback short-term charges relationship has loosened up to now two months, however the market’s bearish USD tendency means additional dovish repricing might show to be the catalyst for contemporary greenback quick constructing.”

“There aren’t any tier-one information releases within the US immediately. Housing begins are anticipated to have elevated in April, whereas import costs ought to have dropped on the again of decrease oil costs. The College of Michigan surveys have some FX influence potential, particularly with regards to inflation expectations. The median response for the anticipated change in costs over the subsequent yr spiked from 2.8% in December to six.5% in April. Markets are understandably treating these figures with warning: the pattern measurement is simply 500 households, and a few political bias within the responses could also be skewing the end result.”

“This week’s worth motion suggests waning momentum for the greenback to shut its lingering threat premium. The c as strategic greenback shorts stay prevalent, and the 100.0 assist might be retested sooner quite than later.”