USD firmer but holds consolidation range - Scotiabank

The US Dollar (USD) is ending the week a little firmer overall--but still a bit shy of breaking out from the consolidation range in place since the start of the week, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD firmer into weekend on market caution ahead of tariff news

"Major currencies are broadly mixed Friday, with moderate gains noted for the NOK and SEK, plus some gains for Asian regional FX. The JPY, meanwhile, is a little softer (despite higher-than-forecast February CPI) while the USD has advanced a little against the core European majors. Bonds are mixed--Gilts are underperforming slightly--but stocks continue to struggle as soft company earnings add to concerns about economic prospects. Fedex--a company whose performance I noted was a bellwether for global trade recently--cut its profit outlook." 

"Yesterday's Philly Fed survey reflected the stagflation-y vibes from the FOMC earlier this week. New orders weakened and prices paid rose. With this week's run of central bank policy decisions out of the way, the market's focus appears to be shifting more to the early April US tariff announcement. The news flow on tariffs has gone a little quiet over the past week but the smattering of reports that have emerged suggest there is still some uncertainty about how precisely to proceed with the president's desire to unleash aggressive tariffs on its trade partners. Weaker stock market trends and survey reports indicating weakening confidence around the tariff issue may be having some impact on White House thinking." 

"After the broader run lower in the USD through February and March so far, some consolidation or recovery in the USD is not to be excluded as a risk. A firm close on the week would lift chances of a moderate USD rebound, especially if the DXY can push clearly through 104.10. However, the broader issue of eroding 'US exceptionalism' remains which should limit the USD's ability to strengthen significantly. And, oddly enough, the DXY continues to track its (weaker) Trump 1.0 'flightpath' very closely."