USD narrowly mixed in quiet trade - Scotiabank

Trading is off to a quiet start in NFP week. Asian and European stocks are mixed to a little firmer but US equity futures are down slightly, while bonds are a tad softer. The US Dollar (USD) itself is mixed. The Euro (EUR) and Swiss Franc (CHF) are a little weaker on the session while the Japanese Yen (JPY) and Pound Sterling (GBP) are slightly firmer but it's all pretty marginal, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD narrowly mixed as consolidation extends absent trade news

"There were no major tariff developments over the weekend. US officials continue to indicate trade that talks with some Asian countries are progressing but there is no sign of movement from China. Chinese retailers (Temu, Shein) are boosting prices for US consumers significantly in response to tariffs, however, sustaining concerns that tariffs will deliver a significant supply shock to the US economy. In remarks hitting the tape early Monday, President Trump said there was 'no red line' that would alter tariff policy (presumably a reference to market developments)."

"Friday's U. Michigan Sentiment data saw some slight improvement from the preliminary data, likely reflecting President Trump's tariff pause, but the data were still poor--reflecting a slide in current sentiment and expectations and a clear pick-up in inflation expectations that appears now to be reflecting less of a partisan split than a general worry that tariffs mean more inflation. The 1-year inflation expectation of 6.5% in April jumped from 5.0% in March and has all but doubled since January. Policymakers will take note."

"At the same time, Wall St concerns about a recession remain apparent. Despite the rebound in equities from the April low, sentiment remains fragile. Earnings reports this week and particularly how firms characterize the outlook may be influential for broader market sentiment ahead of Friday's jobs data. The DXY retains a soft undertone, with the recent consolidation holding below technical resistance just under the 100 level. A clear push above 100 could see the index squeeze up to the 102 before better selling emerges."