Although the USD is sidelined ahead of US data later this week, base metals have caught a silent bid. More noteworthy is their recent outperformance versus US equities to an extent seen for the first time this year. For the time being, inflation expectations (as measured by US 10y breakevens) are still pointed lower, though in the least, such price action is likely to stabilise the disinflation trend. Owing to scope for higher US yields, we expect the downside for the USD to be limited. The US Dollar Index is currently resting on a plethora of support, above which we would expect renewed demand to emerge, potentially later this week.
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Barclays