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US: This Week's Moves Show Markets Still Not Taking Trump Pledges at Face Value

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Price action across G10 FX this week has seen no let-up in intraday vol and shows that spot prices are still subject to notable headline risk, and are yet to slip into any 'buy the rumour, sell the fact' mode.

  • The USD strength that follow Trump's "RECIPROCAL TARIFFS!!!" post today is the latest sign that markets may be insufficiently pricing the President's policy pledges - despite his administration signalling for over a week that a reciprocal tariff announcement is due.
  • The argument holds for Trump's communiques on Ukraine - having pledged to solve the crisis early in his campaign - him following through has triggered downside in oil, strength in equities and a rally for the EUR.
  • MUFG write that the biggest potential positive from these talks would be a restoration of energy supplies from Russia, which would pose major downside risks to the current bullish price action in natural gas and support their forecasts for a EUR/USD rebound later this year.
  • ING note that headlines are likely to continue this week and can't expect much of a trend change here. As such, they expect the current rally in European FX to continue until at least the end of the week.
  • JPM spot desk see the FX market as feeling tired, with tariff threats the only positive support for the USD here, and the question is how much positivity is now in the price for any ceasefire announcement.
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Price action across G10 FX this week has seen no let-up in intraday vol and shows that spot prices are still subject to notable headline risk, and are yet to slip into any 'buy the rumour, sell the fact' mode.

  • The USD strength that follow Trump's "RECIPROCAL TARIFFS!!!" post today is the latest sign that markets may be insufficiently pricing the President's policy pledges - despite his administration signalling for over a week that a reciprocal tariff announcement is due.
  • The argument holds for Trump's communiques on Ukraine - having pledged to solve the crisis early in his campaign - him following through has triggered downside in oil, strength in equities and a rally for the EUR.
  • MUFG write that the biggest potential positive from these talks would be a restoration of energy supplies from Russia, which would pose major downside risks to the current bullish price action in natural gas and support their forecasts for a EUR/USD rebound later this year.
  • ING note that headlines are likely to continue this week and can't expect much of a trend change here. As such, they expect the current rally in European FX to continue until at least the end of the week.
  • JPM spot desk see the FX market as feeling tired, with tariff threats the only positive support for the USD here, and the question is how much positivity is now in the price for any ceasefire announcement.