USD: Dollar to take its cue from the US-UK trade deal - ING

Following a social media post from President Trump last night that a major trade deal would be announced at 16CET/10ET today, speculation is rife that it will be a US-UK agreement. While US-UK trade relations are not usually a material driver of global financial markets, today's deal may have more impact than usual. In focus will primarily be whether the 10% baseline US tariffs in place under the current 'paused' conditions can be negotiated away, ING's FX analyst Chris Turner notes.

DXY can challenge the 100.35/50 resistance

"The takeaway was the Fed acknowledging the stagflationary risks of higher inflation and higher unemployment. These could come through in the Fed's next set of economic projections released in June. After initially dropping last night, USD interest rates are heading higher this morning, though this could also be a function of better risk sentiment. US Treasury Secretary Scott Bessent is on his way to Geneva to start trade talks with Chinese counterparts this weekend."

"The US data calendar is light today. As usual, weekly jobless claims are in focus and are expected to correct a little lower from last week's jump to 241,000. Should claims stay high, the dollar could nudge lower on the view that business pessimism was finally revealing itself in the jobs market."

"As above, the nature of the US-UK trade deal should be the biggest DXY driver today. A surprise removal of the 10% baseline tariff could see DXY challenge 100.35/50 resistance, where we would expect more selling to emerge. But we imagine quite a few protective buy stops are now being placed above 101.00 from the speculative community."