The US dollar is coming under some broad pressure ahead of the weekend, particularly in USD/JPY.
There could be fears of intervention in the thin liquidity at the open on Sunday or it could reflect the record highs in precious metals and increasing talk of de-dollarization. Another curious move today is the rally in oil markets, which might suggest that something is afoot via the US military over the weekend. Given the drama since the start of the year, I wouldn’t rule that out.
In any case, these moves are notable and USD/JPY is having a look at the post-BOJ lows.
It’s certainly not only the yen though as cable is at the best levels in 14 weeks and is further pressing higher. From Monday’s low, it’s up 230 pips and has been lifted by hawkish comments from Greene, along with stronger retail sales and PMI beats.
The week ahead is also a big one as Trump is likely to name a new Fed chief. There are risks around US equity flows as well with all the megacap tech names reporting earnings.
The rule of thumb on the Fed decision is that Kevin Warsh or Kevin Hassett (particularly the latter) would be dollar negative while Rick Rieder or Chris Waller would be dollar supportive.
We also get a proper Fed decision on Wednesday, though the market is pricing in virtually no likelihood of a rate cut, and no cut is fully priced in until July. The Fed wants to wait and see how the economy develops as we get mixed indications on growth. Airlines have reported high spending in premium segments but today, railroad CSX had a downbeat view on 2026 freight volumes and overall macro.
Inflation appears to be trending down but there is still some angst about how inflation plays out.
This article was written by Adam Button at investinglive.com.