Lack of progress leaves the dollar trapped

The past week has seen the dollar confined to a narrow range, with the DXY index almost exclusively trapped in between 99.0 and 99.5. That lack of impetus for a directional move reflects both a light US data calendar, and a seeming lack of progress in US-Iran peace negotiations, with the latter doing more to generate headlines than a meaningful shift in the backdrop for FX markets. Outside the US, a raft of UK data painted a grim picture, though sterling remains stubbornly resilient, with PMIs more broadly pointing to the growing damage being caused by Middle East energy disruptions.

A public holiday on Monday in many parts of the world, including the UK, the US, and a number of European countries, means another light calendar and limited liquidity for markets at the start of the new week. And, while participation is likely to pick up later on, a lack of data catalysts is set to be a theme yet again. Rate decisions from the RBNZ and NBH should have only limited spillovers to broader currency markets. As such, US-Iran peace negotiations will again be at the centre of attention in the week ahead. But, absent a breakthrough, further range-bound trading looks to be the most likely outcome.

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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