USD: Still downward risks – Ing

The US actions and bonds had a good Monday, but considering the amplitude of the exemptions announced by Trump of China’s tariffs, the movement is far from exceptional. The markets maintain a substantial risk premium associated with US assets, including the dollar. This varies between 2% and 5% in different currencies of the G10, according to our estimates, although the recent instability in traditional correlations and volatility in abnormally high FX means that these deviations should not be taken to the letter, says Francesco Pesole, FX analyst of ING.

The markets remain strongly bassists with respect to the USD

“Anyway, the option market is sending clear signals that the markets remain strongly bassist with respect to the dollar, and the price action on Monday suggests that investors are still will “chaotic” trade policy will not get rid of quickly. “

“Yesterday, the Secretary of the Treasury, Scott Besent, rejected the possibility that foreign nations (presumably China) being undone from the US Treasury bonds attributed the losses of the bonds to the reduction of leverage and, although he said that the treasure has many tools to support the market, we are far from those levels.”

“The risk balance remains inclined down for the dollar, regardless of the general stabilization in the treasure bond market, in our opinion. The data calendar includes today the Empire manufacturing index, which is expected to be rebounded while remains in negative territory. Yesterday, we saw an increase of 0.4% in the inflation expectations of 1 year of the Fed of New York, although the survey dates the survey. More updated survey of the University of Michigan showed an increase in inflation expectations to 6.7%, although the sample is quite small and could be politically biased. “