In the wake of the May 5 tweets that signaled the end of the tariff truce, the dollar was mixed, with a heavier bias.  The strongest currencies were the Japanese yen (~1.0%) and Swiss franc (~0.45%).  The Dollar Index fell about 0.2%.  The major currencies that failed to gain against the dollar had idiosyncratic factors, like the seeming failure of the cross-party talks in the UK (sterling fell ~1.3%) or the rate cut in New Zealand (~-0.75%), and a series of weak economic data from Sweden (krona ~-0.70%) in contrast to Norway where the central bank indicated another hike as early as next month.

Within a medium-term bullish outlook, we anticipated and continue to track what appears to be a consolidative/corrective phase for the dollar.  On balance, we expect this phase to continue in the week ahead.  The escalation of trade tensions between the US and China has offset the impact of the surge in Q1 US GDP and the strong April jobs data on expectations for Fed policy.  The dollar bulls need more time, as it were, to adjust to the narrowing of interest rate differentials, and consider the impact on US corporate earnings from formal or informal retaliatory action by China that may follow.