The US Dollar (USD) is posting minor gains against most peers on Tuesday, with markets calm ahead of the US Consumer Price Index (CPI) release, while lower Oil prices are weighing on safe havens, including the Greenback.
The US Dollar (USD) is facing a shifting macroeconomic narrative as market focus rotates between near-term Federal Reserve (Fed) policy expectations, energy price dynamics, and equity market underperformance.
ING’s Chris Turner expects the US Dollar (USD) to remain underpinned into early 2027 by strong US growth, inflation above 3% and a hawkish Federal Reserve. He notes that as headline inflation falls back towards the Fed’s 2% target, short-dated US rates should decline.
TD Securities’ macro team, led by Jayati Bharadwaj and colleagues, argues that the US Dollar (USD) is losing its status as an effortless haven, with muted gains despite an AI-driven global equity selloff. They expect US vs Rest of the World (RoW) equity performance to remain the key driver.
MUFG’s Lee Hardman notes the US Dollar has weakened, with the Dollar Index dropping below Friday’s high as Brent declines towards USD90. Lower Oil prices and falling US Treasury yields are easing pressure on the Fed, while markets await the October US CPI report. Futures still price a December Fed hike but fewer moves in 2027.
Dow Jones futures advance 0.48% to trade around 52,750 during the European hours on Tuesday. Meanwhile, S&P 500 futures gain 0.17% to trade around 7,590 and Nasdaq 100 futures decline 0.15% to trade around 27,970.
Deutsche Bank’s Jim Reid highlights a strong rebound in US equities, with the S&P 500 posting its best day since the Iran ceasefire announcement in April. The move was led by AI-related and semiconductor names after positioning had turned underweight. The index has almost fully recovered its post-midterm losses, while volatility, as measured by the VIX, fell sharply.
The US Dollar (USD) is broadly under pressure against its peers amid lower oil prices due to United States (US)-Iran deal hopes.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, consolidates around the 101.70 region during the Asian session on Tuesday, awaiting further developments surrounding the Middle East crisis and the US consumer inflation figures.
The safe-haven US Dollar (USD) is showing the weakest performance among major currencies on Monday, as improving market sentiment boosts riskier-perceived currencies, with negotiations for a Middle East peace apparently making progress and Oil prices dropping to levels near two-month lows.
Brown Brothers Harriman’s (BBH) Elias Haddad notes that the US Dollar (USD) has given back part of its post-NFP gains, but still benefits from robust US economic activity, a firm labor market and sticky inflation that underpin the Federal Reserve’s (Fed) hawkish bias.
MUFG’s Lee Hardman notes the US Dollar has rebounded, lifting the Dollar Index back above 102.00 after post-election losses. Stronger US labour market data and higher employment growth have shifted the Federal Reserve’s focus toward upside inflation risks.
ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner note that recent contagion from AI-driven equity selling into defensive stocks has lifted the Dollar, even before strong US jobs data.
Dow Jones futures advance 0.65% to trade around 51,720 during the European hours on Monday. Meanwhile, S&P 500 futures gain 0.30% to trade around 7,420 and Nasdaq 100 futures decline 0.12% to trade around 27,050.
Deutsche Bank’s Jim Reid and team note the Dollar Index closed at 102.11, up 0.51%, as markets pivot from strong US payrolls toward October CPI and PPI. Their economists expect softer monthly inflation prints, while year-on-year CPI cannot be calculated due to missing 2025 index levels. They still project 25bp Fed rate hikes in December and March.
ING’s Chris Turner notes that the US Dollar (USD) has reacted only modestly to the sharp sell-off in US tech stocks, with FX markets treating it as a sector-specific story.
The US Dollar (USD) is showing the strongest performance among major currencies on Friday, amid a mix of risk-aversion, following a tech-led rout in equity markets, and investors’ hopes of a strong US Nonfarm Payrolls (NFP) report later in the day.
DBS Group Research’s Philip Wee notes that the Dollar failed to benefit from the latest risk-off episode as US Treasury yields and Fed hike expectations fell. He highlights that the DXY Index was flat despite an equity rout, with investors reassessing the need for further tightening.
MUFG’s Lee Hardman notes that the US Dollar has reversed its initial post-election losses despite a sharp sell-off in AI-related equities.
The US Dollar (USD) trades sharply higher against its major currency peers as global sector rotation due to intensified sell-off in stocks related to Artificial Intelligence (AI) infrastructure has increased demand for safe-haven assets.
Dow Jones futures decline 0.85% to trade around 51,170 during the early European hours on Friday. Meanwhile, S&P 500 futures inch higher 0.06% to trade around 7,390 and Nasdaq 100 futures advance 0.90% to trade around 26,990.