USD holds near 200-DMA ahead of Nvidia earnings – BBH

US Dollar (USD) is firmer near its 200-day moving average. US equity futures are treading water ahead of today’s Nvidia quarterly report. Nvidia’s earnings are viewed as a key barometer of the AI boom, BBH FX analysts report.

USD steady as equity futures await AI bellwether

“Treasury Secretary Scott Bessent expects President Donald Trump to announce his pick for the next Fed chair before Christmas. The five finalists are: Kevin Hassett (Director of the National Economic Council), Kevin Warsh (former Fed Governor), Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Rick Reider (fixed-income chief at BlackRock). All five have argued for looser policy settings.”

“When asked about his choice for the next Fed chair, President Donald Trump said “We may go the standard way. It’s nice to, every once in a while, go politically correct…” The comments skews odds in favor of Waller or Bowman as recent Fed chairs (Jay Powell, Janet Yellen, and Ben Bernanke) were elevated from within the Board of Governors. Alan Greenspan and Paul Volker came from outside. The latest US TIC data indicates continued strong foreign private sector demand for US long-term securities, notably equities. Net foreign purchases of long-term US securities increased by US$208.5bn in September vs. $181.2bn in August driven by near record high net buying of US stocks by private foreign investors.”

“On a 12-month cumulative basis, foreign investors trimmed their holdings of long-term US securities to $1511bn from a record high of $1549bn in August. We expect foreign appetite for US long-term securities (treasury bonds & notes, corporate bonds, equities, gov’t agency bonds) to dwindle over time. The Trump administration’s effort to narrow the US trade deficit means fewer dollars will flow overseas, reducing the need for those funds to be recycled back into US securities. That is a structural drag on USD.”