Cyclical sensitive currencies are outperforming while global equity markets are rallying on encouraging trade developments, BBH FX analysts report.

US strikes trade deals across Asia ahead of Trump–Xi meeting

"The US reached trade agreements with Malaysia and Cambodia and agreed on reciprocal trade frameworks with Thailand and Vietnam. The US and Brazil are also on track to repair trade ties. Importantly, top trade negotiators for the US and China reached a preliminary framework for a trade agreement ahead of Thursday’s meeting between President Donald Trump and President Xi Jinping."

"A busy week of central bank decisions could stir some volatility, but not enough to shake USD off its range that’s held since June. Check-out our Drivers for the Week for all the details. Over the next three to six months, our base case remains for USD to edge lower undermined by a downward adjustment to US rate expectations and US protectionist trade policy."

"Treasury Secretary Scott Bessent announced the five finalists for the next Fed chair: Kevin Hassett (Director of the National Economic Council), Kevin Warsh (former Fed Governor), Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Rick Reider (fixed-income chief at BlackRock). All five have argued for looser policy settings. President Trump plans to announce his pick by year-end."