USD flows: Latest truce, but dollar dips to be bought?
Some mkt comfort in Trump still driving de-escalation
Both sides of dollar smile still active though and better buyers of dips
Bit of relent on the latest oil bounce as Trump posts on Israel and Iran seeking an immediate ceasefire and Iran's joint military command announcing the end of military operations in Israel having made its point. Hardly resolved of course but oil gives back $3 or so of the bounce. US2s also 3.5bp off the highs and equities extending their bounce from Friday’s intraday oversold selloff.
Doesn’t really feel out the woods however ands there’s still something to be said from a technical point of view for the market to extending the overall rally retracement (S&P has 38-50% back at 7150-7000 if the correction has another leg, and the latter would be testing the break that often does need a re-test at some point).
For now, after any initial levelling, dollar dips likely to find better dip buyers as both sides of the ‘smile’ (US outperformance and risk aversion spikes) remain active forks in the road.