The very modest gain of the Bloomberg Dollar Spot Index yesterday was erased in this morning’s session, but the United States dollar remains steady against its G10 peers.
Overview
In the absence of top-tier data releases out of the US so far this week and a fairly slim data calendar through the next few days, with the notable exception of the release of the Federal Reserve’s minutes from its latest policy meeting, the Dollar’s moves today will once again be driven primarily by Fed speakers.
Yesterday’s slew of speakers provided little in the way of concrete direction for the Buck – most, if not all, kept their words on monetary policy close to where market expectations already are. Loretta Mester did say she no longer sees three interest rate cuts this year as appropriate given the strong performance of the US economy in the first quarter of this year, and while this is a departure from her previous statements, it simply falls more in line with what Fed Chair Jerome Powell has been saying for the last month. Treasuries did, though, continue to hover near their recent highs, with equities following suit. With minutes from the Fed’s May 1 decision due out tomorrow afternoon, there are still several Fed speakers remaining on the docket today, but markets expect very few surprises from Bostic, Barkin, Williams, and Waller.
There are a few data points from around the world that could give traders something more substantial to chew on through the remainder of this week; namely CPI releases from the UK and Japan along with the S&P’s global PMI flash reading for May. AI giant Nvidia’s earnings are also due out in the back half of this week, which could prompt some volatility in equity markets that may spread over to FX.
What to Watch Today…
- UK CPI, Wednesday
- S&P Global Composite PMI May Prelim, Thursday 9:45 AM
- Michigan Consumer Sentiment, Friday 10 AM
- Monex USA Online is always open.
CAD ⇓
The Loonie is losing a touch of ground against USD on the heels of a small amount of weakness during yesterday’s market holiday. Canadian CPI this morning for April showed that inflation decelerated to 2.7% on expectations, but the core readings for March were revised up just slightly. Nonetheless, this gives the Bank of Canada some welcome news as concerns about the overall health of the Canadian economy have continued to grow over the past few months. This is also more in line with the US CPI that was released last week, and it could be an indicator of a global cooling trend.
GBP ⇑
One of few currencies to post a slight gain against USD during slow trading yesterday, the Pound Sterling is continuing a touch of strength against the Buck this morning ahead of key CPI figures for April due out tomorrow morning. Bank of England Governor Andrew Bailey is also due to speak this afternoon after the close of the London trading session which could provide markets with a preemptive catalyst. As it stands now, traders expect 55 basis points of easing from the BoE this year and have priced in a first cut at the beginning of August. A downshift in CPI tomorrow, however, has the potential to move up the timeline for such a decision.
