USD flows: more of the same from US data and shakeout (DXY, AUD, EUR, NOK)
US data shows strength on prices and activity, chipping away at dollar shorts
Backdrop remains skewed to stretched position reductions
U.S. May Empire State Manufacturing Survey completes a week where the relative, and underappreciated, firmness in US price and activity data is starting to tell, providing one of the legs to the current mini dollar squeeze. We could see this echoed again in next week's respective PMI data releases.
The other dimensions come from realisation that the hawkish Iran rhetoric goes on with little progress, finally feeding some position pare back across the stretched AI-build-out risk-on action. Not quite a capitulation of course given the size of today's moves in the context to the huge runups, and the recent Teflon nature of the rallies, but certainly some new volatility and potential momentum shifts. Most of the 'popular' trades with underlying logics feeling some of the pain today (for example, threatened weekly reversal on NOK, even with the oil gains) and that could spill over if enough chart damage is done.