Dollar rebalancing stays in the spotlight this week, says Credit Agricole.
Credit Agricole wrapped up last week by noting that the U.S. dollar will continue to be a focal point for traders, especially after a flurry of key economic data just delivered. They contend that, all things considered, the dollar may still find pockets of relief in this environment if the broader mood stays balanced.
Looking ahead, the firm emphasizes that the USD rebalancing theme could remain a central driver next week. Traders will parse the December TIC data for signs that foreign demand for U.S. Treasuries and U.S. stocks is slowing. Alongside that, attention will turn to the December core PCE deflator, February PMIs, the January FOMC minutes, and ongoing Federal Reserve commentary. FX participants will also watch for any headlines about the Supreme Court’s long-anticipated ruling on Trump-era tariffs.
Overall, Credit Agricole suggests that many of the negatives already priced into the dollar are unlikely to vanish without a data surprise or a dovish shift from the Fed in the near term. A more lasting relief for the USD would require clear signs that international investors continue to purchase U.S. assets, beyond the current expectations.
Two non-usual risk events loom beyond the standard calendar this week. First is the December 2025 US Treasury TIC report, due on February 18, which gauges foreign appetite for U.S. debt. Notably, U.S. holdings reached a record $9.36 trillion in November 2025, even as China’s holdings fell to their lowest level since 2008.
However, it’s important to note that this data doesn’t capture all of China’s Treasuries, as it measures holdings via U.S. custodians. In other words, China could still be acquiring Treasuries through non-U.S. custodians. Belgium and Luxembourg, among others, have sizable holdings that compete with major players.
The second major external risk this week is a potential Supreme Court decision on Trump-era tariffs. The court has an opinion hearing slated for February 20, which could introduce end-of-week volatility for markets.
More context: the Supreme Court has announced that next Friday will be a decision day.
