Global FX: USD pre-Fed, EM movers, GBP & cross-border M&A

The U.S. dollar remains well-supported as rising energy prices fuel hawkish repricing for the Federal Reserve. While gasoline price thresholds serve as critical markers for U.S. administration policy, current market sensitivity to oil price increases—rather than decreases—reinforces the dollar's strength. In emerging markets, the South African rand faces pressure following a dovish surprise from the central bank, while Hungary’s currency navigates a shift in risk premia. Sterling remains neutral as it reaches stretch levels relative to fair value, with the Bank of England expected to maintain a balanced, tightening bias. Meanwhile, cross-border M&A data reveals that while sterling benefits from significant inflows, the U.S. dollar has yet to see a similar boost from the AI boom, highlighting a divergence in capital flows compared to historical tech cycles.