Dollar Dips After Best Week Since March

Good morning, the U.S. Dollar is down against the majority of its major peers this morning after last week marked the biggest weekly gain in more than two months. The dip appears to be somewhat of a technical correction as brent crude surged as much as 2.5% in early morning trading, before paring gains to around $109 per barrel, and long-dated U.S. government bond yields have steadied near their highest level since 2023. Both higher oil prices and higher bond yields should provide some support to the Buck in the short term.

Geopolitical headlines remain a major driver of price action, and President Donald Trump has expressed frustration with Iran after drones targeted a nuclear power plant in the United Arab Emirates. The UAE’s nuclear regulator said that there were no radioactive leaks and no risk to the public as a result of the damage caused by the drones. Saudi Arabia also reported intercepting drones over the weekend, although it is not clear if they were related to the incident in the UAE. The attack underscores the fragility of the current ceasefire and negotiations to reach a more permanent truce have made little progress.

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JPY ⇓

The Japanese Yen is the only G10 currency falling against the Greenback this morning. The drop follows a call from Prime Minister Sanae Takaichi to compile a supplementary budget in response to rising commodity prices after weeks of denying a need for additional funds. While this will feed some spending concerns, it was largely seen as unavoidable given the current state of energy prices. The funds are expected to be used to fund emergency relief measures rather than provide economic stimulus. Japanese GDP figures will be released overnight.

GBP ⇑

The British Pound is up against the Buck this morning despite rising fears of political instability and looser fiscal policy. Following the ruling Labour party’s significant loss of seats in local elections a few weeks ago, Prime Minister Keir Starmer has faced a number of challenges from within. The latest of which is Manchester Mayor Andy Burnham, who has announced that he intends to run for a return to parliament. Traders view the potential elevation of Burnham to the prime ministership as a risk to fiscal discipline and have piled into bearish Sterling trades as a result.