The US Dollar (USD) is little changed on the session. A minor recovery in the Dollar Index (DXY) yesterday keeps the index in a tight range around the 100-day MA (98.58). Calm, low volatility trading risks getting a shake up over the coming days, however, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Fed chair nomination and court rulings in focus

"The potential for President Trump to announce his nomination for the Fed chair before the end of next week. His choice seems highly likely to reflect the administration’s desire for significantly easier policy. Governor Miran said yesterday that more than 100bps of cuts are needed this year. And yesterday, the Supreme Court announced that it will be delivering opinions on pending cases Friday."

"That could mean a decision on IEEPA tariffs—a signature Trump policy. The court sounded skeptical on the administration’s arguments in support of reciprocal and fentanyl-related tariffs under IEEPA. If struck down, the administration has other channels to reimpose them but it may take some time and the USD might soften in response to such a decision (lower trade uncertainty, lower price pressures, if only temporarily)."

"Most core major currencies are deviating by less than +/-0.1% against the USD on the session. The MXN is a marginal outperformer—up a little over 0.1%. Stocks are mixed while core bond markets are generally firmer, driving yields 4-6bps lower in Europe. Treasurys are lagging somewhat, however. Technically, we still rather think DXY gains are a fade in the upper 98 area (200- day MA at 98.88)."