Rangebound into June

The dollar remains stubbornly rangebound as the end of May approaches, with the DXY having traded almost exclusively between 99 and 99.5 over the past fortnight. Conflicting Middle East headlines continue to dominate market thinking, but with few signs of concrete progress, neither risk conditions nor terms-of-trade are offering an avenue for a meaningful break of recent ranges. Coupled to a light data calendar, this has left idiosyncratic stories to drive the few FX moves of note. Political risk in the UK has seen sterling underperform, while USDJPY is once again trading close to the 160-mark, with intervention nervousness a theme to watch headed into June.

The week ahead will likely see these stories persist, but against a busier data backdrop. Inflation data from the eurozone, Switzerland, and Sweden should all garner some attention, as should an NBP rate decision, alongside jobs data for Canada and the US. Even so, we suspect that US-Iran peace talks will continue to overshadow macro fundamentals yet again. That suggests a somewhat subdued start to the month ahead for the buck, absent any surprise developments.

You can read the Week Ahead in full here:

Authors:

Nick Rees, Head of Macro Research

Barry van der Laan, Senior FX Market Strategist

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