On The Dollar And The Donald’s Politics

Politics have driven up the US dollar. How will they impact the greenback going forward?

Here is their view, courtesy of eFXnews:

USD: ‘Tomahawk’ Risk Appetite; Soft Vs Safe-Haven & High-Yield This Week – Barclays

Barclays Capital FX Strategy Research expects the USD is likely to trade on the soft side vs. safe haven and high yield currencies this week, following a disappointing employment report and renewed geopolitical concerns after the US strike in Syria.

On last week’s jobs report, Barclays notes that it adds downside risk to our recently changed call for two Fed hikes, in June and September, and balance sheet reduction starting in December.

On the geopolitical risks, Barclays notes that they have increased after the US strike in Syria arguing that the shift in US policy might signal a more interventionist attitude in the Middle East, escalating the risk of proxy wars in the region and increasing uncertainty.

USD/JPY is trading circa 110.85 and AUD/USD is trading circa 0.7500 as of writing.

USD: President Trump’s Trade War Is Set To Begin – Credit Agricole

Credit Agricole CIB Research notes that investors will focus on the upcoming US treasury FX report which could become the focal point of market fears about the changing relationship between the US and its main trading partners.

In that regard, CACIB notes that while the report is expected in mid-April and, given the upcoming Easter holiday, it could come either next week or the week after.

“In the G10 space, only Japan and Germany have been identified so far by the US administration as enjoying an unfair competitive advantage. The FX report could substantiate those claims in the case of Japan and even drag Switzerland into the spotlight. Also of significance for the FX markets is whether China receives greater scrutiny,” CACIB argues.