BoJ pushes back while the dollar continues to tread water

The US dollar looks set to end the week broadly flat against major currencies after, by recent standards, a quiet week in FX markets. But Wednesday may have offered a glimpse of what is to come over the coming months – weak US retail sales and industrial production data pushed both equities and Treasury yields lower, in contrast to the negative correlation between those which prevailed throughout 2022. That risk-off mood in financial markets set the stage for a sharp intraday rally in the dollar, and we think weakness in the global economy (China aside) will continue to spur safe-haven demand for the dollar.