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FOREX: Dollar Dips On Bessent Nomination But Downside Follow Through Limited

FOREX
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The USD is holding lower, with the dollar indices off between 0.50-0.55%. We gapped lower at the open, but have largely been range bound since then. The BBDXY was last near 1285, slightly up from session lows near 1283.54.

  • Sentiment in the FX space has been dictated by the nomination of Scott Bessent, the former hedge fund manager, to the US Treasury Secretary position.
  • Bessent's public comments around looking to curb the deficit, and that incoming President Trump can use tariffs as a negotiating tool has weighed on broader USD sentiment (as they are seen as less reflationary). Still, headlines have crossed the afternoon from the WSJ that Bessent sees delivering Trump tax cuts and keeping the USD as the world's reserve currency as a priority.  
  • This has helped stabilize USD sentiment at the margins. USD/JPY got close to the 20-day EMA support (near 153.50), but now sits back at 154.00, around 0.50% stronger in yen terms. EUR/USD got as high as 1.0501, but is back to 1.0480. AUD and NZD sit off earlier highs as well. AUD/USD last near 0.6525/30, NZD/USD around 0.5855. Earlier data showed NZ real retail sales for Q3 fall less than forecast.
  • As we noted earlier even with a potentially market friendly appointment like Bessent, the near term macro backdrop is still USD positive, particularly from a data momentum standpoint.
  • In the cross asset space, US yields sit lower, down 3-5.5bps, but much like the USD, had an initial gap lower, but there hasn't been follow through. US equity futures are up 0.45-0.55%, led by the tech side.
  • Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.
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The USD is holding lower, with the dollar indices off between 0.50-0.55%. We gapped lower at the open, but have largely been range bound since then. The BBDXY was last near 1285, slightly up from session lows near 1283.54.

  • Sentiment in the FX space has been dictated by the nomination of Scott Bessent, the former hedge fund manager, to the US Treasury Secretary position.
  • Bessent's public comments around looking to curb the deficit, and that incoming President Trump can use tariffs as a negotiating tool has weighed on broader USD sentiment (as they are seen as less reflationary). Still, headlines have crossed the afternoon from the WSJ that Bessent sees delivering Trump tax cuts and keeping the USD as the world's reserve currency as a priority.  
  • This has helped stabilize USD sentiment at the margins. USD/JPY got close to the 20-day EMA support (near 153.50), but now sits back at 154.00, around 0.50% stronger in yen terms. EUR/USD got as high as 1.0501, but is back to 1.0480. AUD and NZD sit off earlier highs as well. AUD/USD last near 0.6525/30, NZD/USD around 0.5855. Earlier data showed NZ real retail sales for Q3 fall less than forecast.
  • As we noted earlier even with a potentially market friendly appointment like Bessent, the near term macro backdrop is still USD positive, particularly from a data momentum standpoint.
  • In the cross asset space, US yields sit lower, down 3-5.5bps, but much like the USD, had an initial gap lower, but there hasn't been follow through. US equity futures are up 0.45-0.55%, led by the tech side.
  • Later the German November IFO survey, US October Chicago and Dallas November Fed indices print. The ECB’s Lane, BoE’s Lombardelli and Dhingra speak.