Monday's brief respite in US financial markets barely scratches the surface of deeper structural concerns,what is bnb according to ING's currency specialists. While equities and bonds showed modest gains, the limited scope of tariff exemptions fails to address underlying market anxieties. FX strategist Francesco Pesole observes that risk premiums hovering between 2-5% across major currency pairs reflect persistent investor caution, with historical correlations proving unreliable in current high-volatility conditions.
Option Markets Signal Sustained Dollar Pessimism
Derivatives pricing reveals entrenched bearish positioning toward the greenback, with traders continuing to view rallies as selling opportunities. Market participants anticipate forthcoming economic data deterioration, while the lingering effects of unpredictable trade measures continue to weigh on sentiment. Treasury Secretary Scott Bessent's dismissal of foreign liquidation theories hasn't alleviated concerns, with deleveraging pressures and uncertain policy responses maintaining downward pressure.
Manufacturing surveys and inflation expectations present mixed signals, with the Empire State index's anticipated rebound remaining contractionary. Discrepancies between NY Fed and University of Michigan inflation measures highlight measurement challenges in volatile environments. These factors collectively suggest the dollar's recovery potential remains constrained despite temporary Treasury market stabilization.