US dollar slides as the demand for safety ebbs

Fed rate cut pricing has slipped from yesterday and Treasury yields are rising but the overall risk trade is improving and that’s leading to US dollar sales. It’s a broad but modest move at the moment, with the US dollar down around 30 pips from an hour ago.

Here’s a chart showing the rebound in the pound against the US dollar.

Aside from yen trades, the FX market has been orderly in the past week, even as turmoil sweeps markets elsewhere.

I wonder if that lack of a decisive move higher in the US dollar last week was reflective of:

• USD/JPY selling hitting USD elsewhere

or

• Positioning that’s already saturated in US dollars

In any case, it’s worth keeping a close eye on the moves in equities and the US dollar. I don’t think we will get a clean read on whether this episode has crested until near the US close.