Highlights

• The never-ending consolidation is about to end
• Most medium-term concerns about the US dollar are overblown
• ECB rate decision outlook
• Key data and events to watch next week

The month of June has been characterized by a seemingly endless consolidation in both USD-currency pairs and in many cross-currency pairs as well, not to mention stocks and other major asset markets. Looking back, it's perhaps easiest to view the consolidation in terms of investor risk appetites and the stabilization in the global downturn. Since March, generally less-worse data has seen risk appetites improve, leading to substantial gains in risky assets like stocks, commodities, and, in FX, higher JPY-crosses and a weaker USD. In June, the optimism over the near-term outlook gave way to the realism that major economies were simply stabilizing at extremely low levels and that any recovery or outright growth was months away and likely to be anemic at best. And it was that tug-of-war between optimists and realists that played out in the form of the choppy consolidating