FX Weekly

The US dollar performance remains mixed despite elevated optimism for a Middle East peace deal, while extreme long positioning in AUD and political risks in Turkey suggest currency downside. US yields continue to trend higher as Fed officials signal a less dovish stance.

Key Takeaways

• 1.AUD outperformance may be peaking as market positioning reaches record longs and RBA hawkishness is priced in.
• 2.The Turkish Lira (TRY) faces significant downside due to domestic political instability and depleted foreign exchange reserves.
• 3.US yields have room to move higher as the Fed considers dropping its easing bias due to persistent inflation.

Table of Contents

• Optimism elevated but FX response muted
• AUD: Advance could be running out of steam
• US yield move higher could run further
• TRY: Domestic political adds to downside risks for TRY from energy shock
• Weekly Calendar
• Open Trade Ideas
• Closed Trade Ideas
• FX Portfolio
• FX Positioning
• JPY Flows – Balance of Payments
• G10 FX Reactions to US CPI

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