The United States Dollar remains range-bound within half a percent this morning with limited news flow from inside the US.
Overview
Rising treasury yields provided some relief for USD overnight as traders trimmed bets for Federal Reserve interest rate cuts later this year. Atlanta Fed president Raphael Bostic yesterday told CNBC that he favors raising benchmark rates one more time and then holding above 5 percent for some time, providing support for the Buck. Bostic’s words are likely to reflect the sentiment of many governing members of the Fed and the May meeting. As governing members enter their media blackout next week preceding the meeting, speeches and interviews this week will dominate price cycles.
Later today, New York Fed President John Williams will speak, and any hint of his thoughts on the Fed’s path forward will drive price action. Currently, markets are pricing an 88% chance for a hike next month, with an added slight chance of another raise in June, though still unlikely. With little hard data remaining on the calendar before May 3rd’s decision, sentiment drives markets.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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CAD ⇓
The Canadian Dollar posted a minor loss this morning against the greenback, weighed by a 2% drop in WTI crude oil future prices. The strong ties between the Canadian and US economies are proving dastardly for the Loonie – trimmed bets for US rate cuts later this year are keeping CAD depressed. Two-year treasury yields from the US are currently priced above those from Canada, making the Buck the more attractive asset.
GBP ⇑
Pound Sterling gained against most of the G10 this morning as UK inflation data surprised to the upside. The Consumer Price Index once again broached the 10.0%-mark year-over-year, muddying the waters for the Bank of England. This “cost-of-living crisis” continues to be a thorn in the side of Rishi Sunak’s government; the Prime Minister has staked his reputation on returning inflation to a 2 percent benchmark and faces political doom if he is unsuccessful.
