ING currency analyst Francesco Pesole noted that Bessent’s comments on the US-China trade war provide a supportive signal for US sentiment. Bessent views the current tariff situation as unsustainable and foresees a near-term de-escalation. As the market reacts to news regarding Federal Reserve independence and US tariffs, the dollar shows the highest correlation to trade news among G10 currencies. While risks remain weighted against the dollar currently, a stabilisation rather than significant weakening is anticipated in the coming weeks.
Bessent emphasized that the current tariff situation is unsustainable and anticipates a future de-escalation, which provides hope for fragile US market sentiment.
Despite a stabilizing preference for the dollar, the risks skew negatively in the near term, indicating a potential shift from the recent trend of dollar selling.
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