USD consolidates as markets await tariff news – Scotiabank

The US Dollar (USD) continues to consolidate. While broad USD sentiment remains constructive in anticipation of growth-positive policies under President Trump, a lot of good news in priced in to the USD at this point and markets are already positioned very long USDs, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

USD consolidates and investors await more specifics on tariffs

“That may leave the USD prone to position-adjustment in the event of adverse news or market doubts about how quickly Trump can advance his agenda. The key issue for traders in the short run is tariffs—how quickly and how hard they hit those countries that are under immediate threat. The longer the wait goes on for news, the greater the risk of some drift lower in the USD.”

“With little on the data front to move markets today (US weekly claims and the KC Fed Manufacturing Index are the only US releases scheduled), the session ahead may be relatively subdued. The DXY is heading for a second weekly loss, however, with price signals starting to tilt somewhat bearishly on the charts.”

“The JPY has underperformed this week but has a very slight edge on its G10 peers so far today, despite a pickup in US bond yields, as markets anticipate a 25bps hike at the BoJ policy decision (due overnight). Note Japan also releases December CPI data this evening. Australia releases PMIs.”