USD slips on the day – Scotiabank

The Dollar Index (DXY) is trading lower at the end of the week. Dollar gains on the day are concentrated against the JPY and CHF, with havens falling as equity markets rebound amid hopes that a US government shutdown will be avoided. Note, however, that gold traded above $3000 for the first time this morning, reflecting ongoing demand for a hiding place from broader uncertainty as trade wars intensify and sovereign investors passively diversifying from the USD, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD slide extends into the end of the week

"Most of the major currencies are showing gains versus the USD on the session so far and the DXY is slipping towards a net loss on the week overall. I still rather think the broader trend in the DXY is geared towards further declines in the coming weeks towards the 100/102 range. Chinese stocks jumped more than 2% earlier as investors anticipate stimulus measures will result from a government briefing on boosting consumption next Monday." 

"US equity futures are positive but more than half of the stocks in the S&P 500 are in 'correction' mode now and market breadth is quite weak, with just 35% of NYSE stocks trading above their 200-day MA. It’s not difficult to think that conditions point to more softness in stocks as tariff risks remain prominent. Losses for the S&P 500 are around 6% since the start of the year. Fedex has underperformed the broader market by a significant margin, falling 14% YTD terms. Fedex is something of a bellwether for global trade so the downturn augurs for some slowing in global trade volumes in the coming months after a pickup last year." 

"That is no great surprise in the current environment, but it does reflect obvious headwinds for global growth momentum. The U. Michigan sentiment data is the only economic release from the US today. March data is expected to reflect a third consecutive monthly drop in sentiment, reflecting consumer concerns about the erratic roll out of tariffs, DOGE-driven austerity and worries that the Trump platform could slow growth momentum in the next couple of quarters."