ING’s Francesco Pesole notes that the dollar is making up for recent gains against G10 currencies as stock markets recover and risk sentiment improves. It highlights expectations for stronger U.S. consumer confidence and smoother JOLTS openings, which should continue to signal a robust labor market. Pesole sees today’s data as neutral or moderately supportive for the dollar, with USD growth momentum clearly weakening ahead of Kevin Warsh’s speech in Sintra.

The dollar is weakening as risk attitudes improve

“The dollar continued to give up recent gains against most G10 currencies, largely driven by a recovery in stock markets. Additional support for risk-on sentiment comes from news that the United States and Iran will begin a new round of negotiations despite the weekend’s skirmishes.”

“However, the latter appears to be having an impact on the oil currencies (Australian dollar, Canadian dollar and Norwegian krone), which are lagging the yen.”

“Today the focus is on US data. Our macro team expects a consumer confidence index of 97.5 well above consensus (vs. 94.5), supporting the stable spending narrative. In contrast, JOLTS openings are expected to decline in May, with our forecast of 7.25 million vs. consensus of 7.3 million.”

“Overall, we see a neutral to moderately positive impact on the dollar from today’s data. However, the USD’s bullish momentum has clearly weakened and the improved risk sentiment argues against further strong gains for now, at least until Fed Chairman Kevin Warsh’s speech in Sintra tomorrow and Thursday’s labor market data provide a clearer direction.”

(This article was created with the assist of an artificial intelligence tool and has been reviewed by an editor.)