At Any Rate Global FX: Sailing the USD Bearish Ship in Murky Waters
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Oct 17, 2025 The discussion kicks off with the implications of the US government shutdown on dollar visibility and Fed clarity. Global growth indicators reveal mixed signals, with developed markets showing weakness while emerging markets hold steady. Tensions in US-China relations are explored, highlighting their impact on regional currencies. Surprising labor data from Australia and New Zealand prompts a look into upcoming policy reactions. Insights from the recent IMF and World Bank meetings shed light on dollar positioning and policy risks.
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DM Surprise Dip Threatens Euro Narrative
- DM economic activity surprise indices have dipped into negative territory while EM holds up better.
- Prolonged negative DM surprises could weaken the euro-dollar bullish narrative.
Bank Stress: Localized For Now, Watch Safe Havens
- A US regional bank flare-up caused big equity and banking-sector moves but is seen as likely localized.
- If conditions escalate, safe-havens like CHF and JPY typically outperform while high-beta currencies suffer.
US-Centric Risk Could Strengthen Euro
- A US-centric banking shock could actually lift EUR/USD by allowing the Fed to be repriced lower.
- Typical risk-off playbooks may not apply if the shock is US-specific.