DBS Group Research’s Philip Wee notes that the first day of the Trump-Xi Summit in China favoured USD Bulls as President Trump stressed economic cooperation and trade rollbacks. Wee highlights that the administration appears keen to pivot from geopolitics toward domestic economic concerns, and he characterizes the current Dollar strength as a corrective move rather than a new sustained uptrend.

Summit tone supports USD correction

"The first day of the Trump-Xi Summit in China belonged to the USD Bulls."

"US Treasury Secretary Scott Bessent made some interesting comments ahead of Day Two. Bessent remarked that the oil supply shock could be transient, framing the current price spike as an aberration that could be over in weeks or months."

"Bessent, known as the Trump administration’s macro anchor, to stabilize markets, was probably playing down the rise in the US Treasury 10Y yield, which has risen from 3.94% to 4.48% since the start of Operation Epic Fury."

"While markets are recalibrating their Fed expectations from cuts to hikes later in the year, the Trump administration is considering how to keep the Fed on a pause to an easing bias ahead of the November midterms."

"If so, we won’t be hasty to call this the start of a new USD uptrend, but more as a corrective adjustment of April’s sell-off on off-ramp hopes."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)