USD AI Market Pulse, Friday, 13 November 2026
JAFX AI’s read of the news on USD (US dollar), as it stood at the end of the day: read at 20:13 UTC.
Bias: bullish
USD consolidating at 19-month highs above 103 DXY after a slightly soft PPI; ~85bp of Dec/Jan Fed hikes priced, so Warsh on Monday is the swing factor.
October PPI undershot on the headline (6.5% y/y vs 6.6% f/c, 0.3% m/m vs 0.4%), while core matched at 5.0% y/y and 0.3% m/m. That did not add to hike bets but did not unwind them either. DXY held a bullish consolidation above 103.00, just under Thursday's 103.24 high, through a heavy slate of Fed speakers. Iran's IRGC strike on a US radar in Bahrain, a global Microsoft outage and weak tech sentiment added a safe-haven bid.
The past week
A powerful macro-driven rally followed Waller floating a 50bp December hike on Tuesday and a hot CPI print. Short-dated US yields are ~40bp higher since Tuesday, and DXY is on track for a third weekly gain at its highest since April 2025. The dollar outperformed broadly: EUR/USD broke below 1.11 toward 1.1047, GBP/USD fell ~1.7% to ~1.3220, AUD/USD slid below 0.6800 and USD/JPY pushed through 160.00.
The bigger picture
The Fed is out-hiking peers (RBA seen done, BoC behind) amid sticky ~5% core producer inflation, strong Q3 GDP and a tight labour market, so rate differentials favour USD. NBC sees support through year-end before relative-rate support peaks and midterm politics weigh in 2027.
Positioning
An aggressive hawkish repricing is already in the curve: ~85bp across Dec and Jan (ING), ~87% Dec hike odds and ~14.5% odds of a 50bp move. Further USD upside therefore needs Warsh or the data to validate a 50bp or faster path. A 'gradual' message from the Chair could trigger an outsized correction in a rally BBH already calls stretched-looking.
Scenarios it set out
- Warsh (Mon 17:00 UTC) endorses urgency, open to 50bp in Dec or back-to-back Dec/Jan hikes Front-end yields extend higher. DXY breaks above the 103.24 high on the bullish-flag breakout, EUR/USD heads sub-1.10 and USD/CAD retests 1.43. USD/JPY presses 160.40/160.70, where Japanese intervention risk caps it.
- Warsh stresses gradual, data-dependent 25bp steps and pushes back on 50bp The 50bp premium (~14.5%) bleeds out and the stretched rally corrects. DXY slips back toward or below 103.00, USD/JPY eases toward 158.70 support, and GBP/USD and AUD/USD rebound toward 1.3310 and 0.6800.
- Tue Retail Sales well above 0% f/c (ex-autos > 0.4%) vs a negative print A beat cements the Dec hike and keeps USD bid near highs. A contraction plus soft control group would challenge the robust-growth narrative and extend any Warsh-driven pullback.
What it said to watch
- DXY 103.00 floor vs the 103.24 19-month high
- USD/JPY 160.40/160.70 and 162.20: MoF/Katayama 'sharp, one-sided' warnings and intervention risk
- EUR/USD 1.1047 and the 1.10 handle
- GBP/USD 1.3220/1.3140 support ahead of next week's UK CPI and wages
- 2y UST yield momentum and CME FedWatch odds of a 50bp Dec hike (~14.5%)
- US tech sell-off: ING flags it as the main thing that could derail hike pricing
Risk ahead, as it saw it
Fed's Jefferson tonight (00:00 UTC). Fed Chair Warsh Mon 16 Nov 17:00 UTC (HIGH), with Williams and Barr earlier Monday and NY Empire State 13:30 UTC. Retail Sales Tue 17 Nov 13:30 UTC: headline f/c 0%, ex-autos f/c 0.4%, plus control group.