«Bad but less than feared»
Policy uncertainty and surprises keep FX markets volatile, but the USD has stabilized at a lower level. The impact of US policy shocks is negative but less than feared. In particular, the risk of a recession in the US has declined significantly. The damage to US policy credibility has not been undone, but the nearterm outlook for the USD appears more balanced. …
Economy & Interest Rates
There have been no major forecast changes except for an upward revision of US growth following the sharp drop of imports in April. Business sentiment and consumer confidence remained range-bound in May amid continued uncertainty over US policy but the risk of a recession in the US …
FX Markets
The USD stabilized over the last month versus both all other major currencies as well as EM currencies. The GBP was the best performer while the TRY depreciated further. Speculative positions remained largely unchanged, with the USD significantly oversold, especially versus the JPY. Short-term interest rates diverged, with …
FX Analytics
The discretionary Macro positions remained all unchanged (neutral except for long JPY). In Business Sentiment the long EUR position increased and the short GBP position declined. The balance of all Business Sentiment positions is one quarter short USD. Technical went neutral USDJPY, …