FX Weekly

The US dollar is set to advance further as rising Treasury yields and the appointment of Kevin Warsh as Fed Chair shift market focus toward persistent inflation risks.

Key Takeaways

• 1.The US dollar is expected to strengthen further due to rising front-end yields and increasing conviction of a Fed rate hike by early 2027.
• 2.Kevin Warsh's appointment as Fed Chair signals a 'regime change' that may prioritize inflation management and changes to forward guidance.
• 3.A upcoming USMCA trade review in July 2026 creates significant trade policy uncertainty, potentially weakening the Canadian Dollar (CAD).

Table of Contents

• Bond markets in focus – USD to strengthen further
• USD: Yield influencing FX again as Fed seen hiking
• What should we expect in the early days of Warsh as Fed Chair?
• Yields I factors supporting higher US yields as well
• US dollar can advance further over the short-term; GBP downside risks
• CAD: Will upcoming USMCA trade review threaten USD/CAD stability?
• Potential outcomes: i) clean extension, ii) painful extension, iii) shift to annual reviews, iv) pivot to bilateral trade deals, and v) early withdrawal
• Weekly Calendar
• Open Trade Ideas
• FX Portfolio
• FX Positioning
• JPY Flows – Portfolio & by investor type
• GMR Economic Indicators
• UNITED STATES - EXECUTIVE SUMMARY AND TRENDS
• UNITED STATES – INFLATION DEEP DIVE
• FX Correlation Heatmaps

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