• Last time out, on August 7, we talked of a (surprisingly?) strong July though the DXY USD Index peaked at a significant looking 100.26 on August 1 (similarly for USD/YEN and EUR/USD at 150.92, 1.1392).
• The USD continues to outperform (surprisingly?) through Q3 and as a result some of our estimates are looking a little wide of the mark currently.
• We suggest it's heightened uncertainty that has led investors, traders to return to the USD or at least pare shorts during the period.
• Late Friday, markets were rocked by the decision of a federal appeals court that most of US President Trump's global tariffs are illegal. The legislature found Trump exceeded his authority by imposing them through an emergency law.
• Relative USD firmness has continued through some underwhelming US data releases in the interim.
• At the time of writing, implied probability of a Fed cut by the next meeting on September 17 stands at 94%. Near fully priced, as Fed Chair Powell’s intimates that employment risks have overtaken inflation worries. However, at this stage, no aggressive easing is envisaged.
• Fed independence worries remain high, as US Treasury Secretary Bessent is seen as actively looking for a successor to Powell, while Trump appears to have sacked Fed governor Cook.
• Abroad, uncertainty is rife too, with fiscal concerns to the fore in Europe, centring on France and the UK, with PM Bayrou seeking a vote of confidence in the National Assembly on September 8.
• Latterly, US President Trump remarked he’s not looking at lowering tariffs on India, but took aim at another BRICS member China after hosting foreign leaders from the likes of Russia, North Korea at a major military parade in Beijing, viewed as a reminder of the continued tensions between the two economic superpowers sides over global politics, trade and tech etc.

Please see here for full report.