The US dollar is poised for further gains as rising inflation and yield spreads drive market expectations toward Fed rate hikes. Meanwhile, political uncertainty in the UK and trade policy risks in Canada weigh on GBP and CAD respectively.
Key Takeaways
- 1.The US dollar is expected to strengthen further as US bond yields rise and the market prices in an increased conviction of Fed rate hikes.
- 2.Kevin Warsh's appointment as Fed Chair signal a potential 'regime change' in policy, which may focus on inflation risks and changes to guidance.
- 3.GBP faces downside risks due to UK political instability involving a potential leadership challenge to Prime Minister Keir Starmer.
Table of Contents
- Bond markets in focus – USD to strengthen further
- USD: Yield influencing FX again as Fed seen hiking
- CAD: Will upcoming USMCA trade review threaten USD/CAD stability?
- Weekly Calendar
- Open Trade Ideas
- FX Portfolio
- FX Positioning
- JPY Flows – Portfolio & by investor type
- GMR Economic Indicators
- FX Correlation Heatmaps
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Authors
Derek HalpennyLee HardmanAbdul-Ahad Lockhart
Securities
DXY2-year US Treasury YieldAUD/SEKGBPCHFBrent CrudeSPX
Themes
Monetary Policy Regime ChangeGeopolitical Energy ShockUK Political Instability
Regions
North AmericaEuropeUKUnited StatesJapanUnited Kingdom