FX Weekly: US dollar going nowhere fast, but the yen is on the move

Despite a continued steady stream of headlines out of the Trump administration, currency markets have remained remarkably calm this week. The dollar has stabilised today but remains around its lowest level in two months. That probably reflects a judgement among market participants that the initial flurry of action from the Trump administration represents, on net, a less aggressive and urgent approach to trade policy than had appeared probable based on his campaign and post-election rhetoric. Our sense is that, absent another surprise from Trump, the dollar will struggle to make much headway in the near term. But we continue to expect the greenback to rebound later in the spring as US tariffs eventually materialise and the FOMC refrains from cutting the fed funds rate any further.