Japan Consumer Confidence Drops Sharply Amid Rising Fuel Costs and Middle East Tensions 
Goldman Sachs, ANZ Cut Oil Forecasts Amid U.S.-Iran Ceasefire Hopes 
RBI Holds Interest Rates Steady Amid Middle East Tensions and Global Uncertainty 
Oil Prices Rebound as Hormuz Disruptions and Middle East Tensions Rattle Markets 
Trump-Iran Ceasefire Sends Dollar Tumbling as Global Currencies Surge 
U.S.-China Trade Talks: Trump and Xi Set for Summit Amid Rare Earths Focus 
Gulf Ceasefire Cracks Rattle Asian Markets and Push Oil Prices Higher 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
Gold Prices Surge to Three-Week High as Trump-Iran Ceasefire Weakens Dollar 
U.S. Stock Futures Surge as Trump Postpones Iran Strikes, Ceasefire Hopes Rise 
Asian Stocks Surge as U.S.-Iran Ceasefire Deal and Samsung Earnings Boost Market Confidence 
Asian Currencies Hold Steady as Middle East Ceasefire Doubts Weigh on Markets 
Gold Prices Dip Amid Middle East Uncertainty and Inflation Fears 
U.S. Stock Futures Surge as Trump Announces Iran Ceasefire, Oil Prices Plunge 
Asian Currencies Rally as Dollar Weakens, Trump-Iran Ceasefire Boosts Risk Sentiment 
Gold Surges Near 3-Week High as Trump-Iran Ceasefire Eases Geopolitical Tensions 
Bank of Japan Governor Signals Accommodative Stance Amid Negative Real Rates 
The recent weakness in the U.S. dollar is expected to be unwarranted, considering the gap that has opened up with relative interest rates. The U.S. dollar’s long positioning has moderated significantly and now stands at just +1 on our +/- 50 BNP Paribas Positioning scale, the lowest level since the US election, reported BNP Paribas in its research note.
Moreover, upbeat United States economic data and upside inflation expectations hinted that markets are under-pricing the Federal Reserve interest rate hikes for 2017 and 2018.
“We, therefore, think this is an opportune time to reload USD long exposure. We keep USD longs via options, against the JPY, EUR & CAD,” suggested BNP Paribas in its note.
The BNP Paribas Bank in its research note mentioned that the risk to the bullish U.S. dollar view likely surrounds the unpredictability of the new US President. It may take time for Trump and Congressional Republicans to agree on tax plans. Furthermore, consumers and businesses may be more optimistic, but are choosing to wait to see how policy plays out before committing actual money.
Lastly, the BNP Paribas Bank concluded that it believe these risks are balanced by the light USD positioning, strong economic fundamentals and near-term USD undervaluation.
