Scotiabank’s global FX strategy team highlights the Dollar is ending the week on the offensive, with modest gains against most G10 currencies as markets focus on US–Iran developments and the swearing-in of Fed Chair Kevin Warsh. Risk sentiment remains relatively calm, with WTI below $100, the VIX subdued, and major bond yields easing from recent highs.

Dollar firm with cautious risk backdrop

"The USD is ending the week on the offensive with broad—albeit modest—gains against all of the G10 currencies with the exception of the CHF."

"The state of negotiations between the US and Iran remains a core focus for markets, as headline risk has delivered a flurry of both risk-on and risk-off knee jerk reactions over the past few days."

"Key measures of risk suggest that markets remain relatively sanguine overall however, as WTI maintains this week’s losses and hovers just below the psychologically important $100/bbl level and as the VIX continues to trade defensively—threatening an extension of its recent decline below 17 at levels well short of the 20 threshold that typically delineates risk-on/off market conditions."

"Focus for Friday’s NA session will continue to center around US/Iran, though progress is likely to be limited given that Americans are preparing for their Memorial Day weekend (Monday holiday)."

"In terms of the Fed, President Trump is scheduled to swear in the new Fed Chair—Kevin Warsh—at 11am ET at the White House."

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