At Any Rate Global FX: Range breaks in the offing for the dollar
Jun 13, 2025
James Nelligan and Patrick Locke, both Global FX Strategists at J.P. Morgan, dive into the dynamic world of foreign exchange. They discuss the dollar's volatility, influenced by recent U.S. macroeconomic data and geopolitical tensions. The duo highlights the Euro's resilience amid trade challenges and reviews upcoming central bank actions in Europe. They also explore the implications of U.S. CPI numbers on market expectations and assess how currency fluctuations could impact stock performance.
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Dollar's Volatility Dynamics
- The dollar saw sharp movements amid tariff threats and geopolitical tensions, notably after President Trump's tariff comments.
- The inverse relationship between dollar strength and tariff headlines remains strong but can reverse with geopolitical risk.
US Data Supports Dollar Weakness
- US macro data shows ongoing moderation with lower inflation and weakening job market signals.
- These trends support a broadly weaker dollar, despite occasional market hesitancy to respond immediately.
Cyclical Drivers of Dollar Moves
- The dollar decline is driven not only by tariff headlines but also by cyclical factors like falling US real yields.
- US inflation is projected to rise in H2 2025, potentially affecting dollar trajectory with Fed policy adjustments.