USD: Credit concerns keep easing – ING
FX volatility has moderated at the start of this week, with US equities extending the rebound on eased credit market concerns, ING's FX analyst Francesco Pesole notes.

FX volatility has moderated at the start of this week, with US equities extending the rebound on eased credit market concerns, ING's FX analyst Francesco Pesole notes.

Cautious optimism that Trump might get a deal out of China

"Zions Bank’s earnings report was solid outside of the losses linked to fraud, even though scrutiny remains high on any other signs of credit stress in the system. The dollar has shaken up last week’s banking concerns and is now only 0.7% off its 10 October high."

"Given the strict link between Fed easing expectations and credit market sentiment at this stage, the rebound is being largely underpinned by a hawkish repricing in the USD OIS curve, with the two-year rate rising 7bp yesterday"

"Not much is moving on US-China trade tensions ahead of the end-of-month scheduled meeting between Trump and Xi. Yesterday, the US signed a deal with Australia to access its rare earth reserves, which might give the US slightly stronger leverage in negotiations with Beijing. But all this is playing a very secondary role for FX at the moment, with the approach seemingly being a wait-and-see one mixed with some cautious optimism that Trump will get a deal out of China."

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