Für den Zugriff auf die beiden Plattformen können Sie jeweils dasselbe Saxo-Konto verwenden.
USD bears’ patience tested ahead of long US holiday weekend.
John J. Hardy
Global Head of Macro Strategy
Summary: The greenback put on a show of strength late yesterday, but Asia came in once again to sell the US dollar ahead of a three-day holiday weekend in the US. Still plenty of uncertainty on the final shape of the US tax cut and spending bill, though the outlines are clear.
Note: This is marketing material.
Latest market moves:
The USD and JPY have been trading quite differently in different time zones, with heavy USD selling often seen in the Asian time zone and once again evident overnight after the USD tried another rally in the US session yesterday. This saw EURUSD testing the key support below 1.1300, a test that was rejected overnight, just as USDJPY rejected yesterday’s backup rally to 144.32, trading below 143.50 this morning. It would certainly inject some confidence in the USD bearish case if we could get the USD to end the week on a very weak note after today’s US session ahead of a three-day weekend.
US treasury yields at the long end of the curve blew out to new cycle highs, but the action reversed later. Yes, the House has passed the “big beautiful” spending and tax cut bill, but it only becomes law one the Senate has had a go at it, and there are a handful of Senators that have a problem with the version the House passed. The Republicans can only afford to lose three votes in the Senate and the bill could be split up and any changes would have to revert to the House for a vote before Trump signs it into law. In other words, we don’t know the final impact here or how the treasury market or the USD will react once a deal has been hammered through both houses.
The outlines are clear, of course – more large deficits, but I’m not seeing whether meaningful tariff revenues are included in the calculation of those deficits: here we sit, after all, some halfway through the 90 day Liberation Day tariff suspension period with no deals and the EU and US disagreeing even on a starting point as the US demands that the EU unilaterally drop its tariffs before talks begin and the EU refuses to bring its digital service tax to the table as a negotiating point. Could we end up at 10-15% tariffs overall? Even so, at the high end of that level, the tax on the US economy is on the order of 1.5% of GDP relative to the feared deficits in the 6-7% range, and much worse if the US economy stumbles into a recession.
The G7 meeting of finance ministers produced a very interesting statement that shouts a broad front of concern on China’s behavior in the global economy as it sought to address “excessive imbalances” and complained of players that engaged in “non-market policies and practices” and agreed on “the importance of a level playing field and taking a broadly coordinated approach to address the harm aused by those who do not abide by the same rules and lack transparency.” Yikes.
Chart: USDJPY intraday
The US dollar and JPY have been performing quite differently across trading sessions, with backups in the price action quite common in US trading hours relative to the selling impulses that are more forceful in Asian hours (the approximate Asian hours starting in blue, with North American sessions starting at the pink lines). It would help the bearish case for the broad selling to unfold around the clock. We’re still some ways from that key 140.00 area in USDJPY.
American sessions starting at the pink lines). It would help the bearish case for the broad selling to unfold around the clock. We’re still some ways from that key 140.00 area in USDJPY.
A reminder of the point in yesterday’s update as the Norwegian krone has been the strongest G10 currency so farthis week, rising against all of its G10 peers on the week, with USDNOK at 10.16 this morning and approaching its lowest level since late 2023, which was 10.05. NOK may be strengthening as the market assesses the long-term weakness in the currency, which doesn’t fit with the country’s large net international investment position (NIIP) surplus if Norway’s government or its enormous pension fund built up on oil and gas profits decide to reallocate more spending domestically.
Next week:
Next week offers a few bits and pieces as per below, but it feels like the important thing to watch is the progress on the trade negotiation front, if any, the form the tax cut/spending bill(s) take in the US Congress and how the US treasury market reacts, as well as the technical situation for the USD and JPY (whether the JPY begins an out-performance or under-performance phase after looking very choppy in the crosses in recent weeks/months).
- Tue: France Flash May CPI, Eurozone May Confidence Surveys, US Apr. Durable Goods Orders, US Mar. Home Price Index, US May Consumer Confidence, US Treasury to auction 2-year notes
- Wed: Australia Apr. CPI, New Zealand RBNZ Official Cash Rate, Germany May Unemployment Change/Rate, Eurozone ECB Apr. CPI expectations, US Treasury auction of 5-year notes, US FOMC Minutes
- Thu: South Korea Rate Announcement, US Weekly Initial Jobless Claims, US 7-year Treasury Auction
- Fri: Japan May Tokyo CPI, Japan Apr. Industrial Production, Australia Apr. Retail Sales, Germany May Flash CPI, US Apr. PCE Inflation, US Final University of Michigan Confidence
FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.
As per our USDNOK chart yesterday, the USD is trending weakest and NOK strongest as we exit the week – but we’re looking for more impulsiveness from the USD and JPY as trading ranges have compressed and we are rangebound in many key pairs.
Table: NEW FX Board Trend Scoreboard for individual pairs. We’re starting to get the first “neutral” ATR ranges (the shading for the ATR for each currency pair) and NOKSEK has even cooled to a low ATR reading (light blue shading) as an outlier.