North American Summary and Highlights 23 Feb

North American session

Americas trading then saw the USD drifted marginally lower again in technical trading.  Traders are now waiting for Trump’s state of the union speech on Tuesday for guidance on tariffs, immigration policy, cost of living, Iran, Cuba and Greenland.  Iran is seen to the highest risk near-term, with some traders fearing that a limited strike could occur in the next 5-10 days.  However, traders are uncertain about the USD’s reaction.  Traditional USD benefit from safe haven flows could be counterbalanced by a selloff in U.S. equities.  Some see the JPY as a beneficiary if an attack occurs, given the outstanding short JPY positions.

 European morning session

In Europe, the USD initially stabilized at lower levels, before the USD edged higher into midday.  Though sentiment remains negative towards the USD, the 15% section 122 tariffs imposed over the weekend to replace the reciprocal tariff is seen as the major Trump administration response and no further immediate action is likely – though threats from Trump are expected to try to keep countries from breaking trade framework deals.  This reduced tension prompted some trimming on short USD positions and helped the USD.