USD: Trade tensions keep US markets on the defensive - Scotiabank

The USD is trading defensively this morning again, while US Treasurys are weaker (and underperforming) and US equity futures are softer. Global stocks are lower after the US government said it would require Nvidia to obtain a license to export one of its chips to China. The US government also launched a probe into the need for tariffs on critical minerals, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD trades softer versus peers as US bonds and stock futures ease

"China responded to calls from the US to start trade talks by saying it is open to discussion if President Trump shows respect. US/Japan trade talks start today and the president will be in attendance. China reported stronger than expected Q1 GDP (5.4% Y/Y) earlier. Industrial production and retail sales figures were also above expectations. The data may reflect a bump in activity ahead of tariffs which will are all but certain to dampen activity significantly in the months ahead. Market sentiment remains fragile amid the barrage of tariff and trade-related news."

"Investors continue to shun the USD--and are cool on USD-denominated assets--while trade tensions persist. The worry persists that the USD will weaken further either as an indirect consequence of trade policy which reduces global imbalances (and reduces demand for US assets as a consequence) or more directly as a result of policy choices. Short-term patterns suggest the DXY may have peaked yesterday around 100.25; broader signals imply the index remains prone to more losses on a sustained push under 99."