USD: A few days of key data ahead - ING

The US Dollar's underwhelming start of the week served as a reminder that even if the worst of the confidence crisis on the dollar's reserve value may be past us, markets remain very much minded to link the greenback's faith with US economic performance. A week full of data releases may offer multiple opportunities to re-enter dollar shorts after some positioning rebalancing last week, ING's commodity experts Ewa Manthey and Warren Patterson note.

The USD to continue getting tossed around by tariff developments

"The much larger drop in the Dallas Fed manufacturing index yesterday suggests a drop to around 45 from 49 looks more likely than the consensus 48 for the ISM manufacturing released on Thursday. Today, expect the dollar's data sensitivity to remain very elevated as April's Conference Board consumer confidence and March's JOLTS job openings data are published. The former was, in previous months, one of the most closely scrutinised pieces of data and regarded as the best forward-looking indicator for the tariff impact on spending. Consumer confidence consensus estimates are rather sparse, centred at a drop from 93 to 88; our call is 86."

"On the tariff side, the US administration is expected to implement some car tariff relief measures today. Those shouldn't go as far as entirely exempting auto parts, which will still face the 25% tariff, but the rules should be modified to prevent paying double tariffs for the likes of steel and aluminium. The White House also announced that auto producers will be refunded up to 3.75% of the value of new cars in the first year."

"The dollar has reversed some of its losses after auto-tariff related news, and as US equities found some late-session support. The greenback should continue to be tossed around by tariff developments (which have been USD-positive of late) and evidence of the damage already done to the US economy emerging from data. On balance, the risks are skewed to the downside for the dollar this week."