Daily thread to exchange ideas and to share your thoughts
Happy Monday, everyone! Hope you're all doing well as we get things going here on the session. It's been a lively start as the dollar is making a comeback following losses sustained after the non-farm payrolls data on Friday, while risk appetite has improved over the weekend after Trump announced that the US will indefinitely suspend tariffs against Mexico.
Despite the better risk mood, the aussie and kiwi are the worst performers as they see gains unwind against the dollar. China's mixed trade balance data earlier also didn't really help as imports fell while exports were only boosted by pre-existing orders.
The yen trails behind after opening with a gap lower to start the day amid the weekend announcement by Trump. USD/JPY still holds near the highs for the day as the greenback stays firm on the session with EUR/USD pushing for a move under 1.1300.
I reckon it's still a bit too soon to call for a full recovery in the dollar but there is certainly reason to be less pessimistic. With Mexico tariffs put on ice and hope springs eternal for a Trump-Xi meet later this month, we may not yet be headed towards a situation where the Fed may have to cut rates just yet.
Currently, Fed fund futures have a 31 July rate cut priced at a ~80% probability. I reckon that's a bit too much. What do you think? What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
