We are back to the dynamic of selling the US dollar alongside risk assets. It’s an unusual one over the past 20 years but it reflects a concern that the US will struggle compared to trading partners.
Some of it also reflects a softer US CPI report today and the potential for rate cuts, despite the tariff war. US 2-year yields are down 14 bps today to 3.80% and that compares to the Fed funds rate at 4.25-4.50%.
One spot I’m watching at the moment is USD/CAD, which is flirting with 1.40. It would be the first trip below that level since November.
This article was written by Adam Button at www.forexlive.com.