DXY held on.

AUD firmed.

CNY did not.

Oil fell on Trump comments.

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Metals adopted.

Miners edged up.

Who wants EM when there’s Fartcoin?

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Junk is actually caught.

Yields lifted.

Shares too.

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The AUD counter-trend transfer continues because the market toys with much less extreme tariff outcomes. Citi has extra.

We lately flipped from bullish to impartial USD as a brand new DXY vary is established.

Regardless of hawkish rhetoric from President Trump, inside debates round tariffs could have led to a extra muted start line and gradual implementation for now.

Headline dangers round tariffs will stay excessive, however there are early indicators that markets are taking out this danger premium.

Our broadly featured DXY honest worth mannequin suggests DXY overvaluation continues to appropriate (Determine 1), the place this mis-valuation has carefully tracked a market-based proxy of tariff danger premium (Determine 2).

This measure tracked Trump’s win chance within the interval earlier than the US election, suggesting it’s a first rate measure for capturing such dangers.

We don’t embrace FX collection in our tracker to take away any ‘built-in’ correlation to DXY.

The takeaway is such danger premium is rolling over, which may imply additional valuation corrections forward.

(If tariff dangers re-emerge, the velocity of any correction may very well be extra restricted.)

We carefully monitor our mannequin residual and tariff danger proxy, notably as Citi’s FX Positioning knowledge point out trimming of USD longs.

That sums it up properly. Present tariffs are priced. Extra aggressive, not a lot.

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I’m nonetheless bullish on an AUD bounce brief time period then decrease later.