ING’s Francesco Pesole notes that the Dollar has been giving back recent gains against G10 currencies as equities recover and risk sentiment improves. He highlights expectations for stronger US consumer confidence and softer JOLTS openings, which should still signal a healthy labour market. Pesole sees today’s data as neutral to mildly supportive for the Dollar, with USD bullish momentum clearly fading ahead of Kevin Warsh’s Sintra speech.

Dollar softens as risk sentiment improves

"The dollar has continued to hand back recent gains against most G10 currencies, largely thanks to a recovery in equities. Added support for risk sentiment has come from news that the US and Iran will start a new round of negotiations despite weekend skirmishes. "

"This second factor, however, seems to be weighing on oil currencies (the Australian dollar, Canadian dollar, and Norwegian krone), which are lagging alongside the yen."

"Focus today turns to US data. Our macro team looks for a well above-consensus 97.5 print in consumer confidence (vs 94.5), supporting the narrative of resilient spending. By contrast, JOLTS openings should fall in May, with our forecast at 7.25m against a 7.3m consensus."

"Overall, we see a neutral to moderately positive impact on the dollar from today’s data. But USD bullish momentum has clearly faded, and improved risk sentiment argues against another sharp leg higher for now, at least until Fed Chair Kevin Warsh’s Sintra speech tomorrow and Thursday’s jobs data provide clearer direction."

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