Fra Danske Bank:
Story of the week (FX). We believe unpredictable US politics is unambiguously USD-negative. Despite Trump’s reversals on Greenland and tariff threats, the greenback posted its weakest week since May. Last week’s developments have pushed markets to embed a renewed political risk premium into the USD – mirroring the dynamic seen last April, when the USD decoupled from front-end rate moves. In options markets, the cost of hedging for further EUR/USD upside has risen sharply, approaching levels last seen in April. We remain both tactically and strategically bullish EUR/USD, though we would be cautious about chasing the latest move higher in the near term, with the trade increasingly crowded.
Macro : The risk of another partial government shutdown seems more limited this time. The majority of the required appropriations bills can be passed even if Senate Democrats block the funding bill for Department of Homeland Security.
STIR : If the long-term implication from last week’s round of ‘sell America’ is a further rise in investors’ USD hedge ratio, the newfound tight, stable EURUSD XCCY basis could be shaken and lead to a wide basis.
FI: As the US Treasury ramps up reserve purchases at the start of the year, we expect next week’s QRA to deliver no changes. The growing fiscal deficit opens the door for auction size adjustments later this year. There are plenty of two-sided risks, including revenue risk from tariff repayments and political risks.
Hurtige nyheder er stadig i beta-fasen, og fejl kan derfor forekomme.
