Strategic USD shorts quickly re-emerge – ING
By: bitcoin ethereum news|2025/05/14 23:30:07
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The dollar gave back almost all of its post-China-deal gains in one session. We think there is still a significant bearish appetite towards the greenback, and a cooler-than-expected 0.2% month-on-month core CPI provided an opportunity to re-enter strategic shorts, ING’s FX analyst Francesco Pesole notes. USD may stabilise today after two volatile days “There are likely lingering concerns that positive trade-related news may soon be outshadowed by hard evidence of the damage already done to the US economy, and there may not be enough incentive to chase dollar rebounds until clarity on the impact of tariffs has emerged. The fact that the 10-year USD swap spread (a measure of perceived Treasury market instability) has not tightened back below 50bp may still mirror concerns related to debt sustainability, and could be encouraging USD shorting.” “Fed rate expectations haven’t moved after yesterday’s softer-than-expected CPI, likely because April data still wasn’t showing the inflationary impact of tariffs. Markets have resized their dovish bets significantly since the US-China weekend deal, and only 50bp are now priced in by year-end. However, given the lower inflationary risks, modest observed inflation in April, and the widely shared pessimistic view on US growth, the risks are likely skewed towards the dovish side, and that can contribute to keeping the dollar recovery capped.” “We think the dollar may stabilise today after two volatile days. We still expect to see a preference for high-beta commodity currencies over safe havens as markets regain risk appetite after the improved trade news.” Source: https://www.fxstreet.com/news/usd-strategic-usd-shorts-quickly-re-emerge-ing-202505141101
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