- After rallying for the past five days, the US dollar lost ground against its G10 peers overnight driven by a fall in USDJPY. Tensions in the Middle East continue to drive risk appetite with markets remaining cautious over further escalation in the region. Aside from geopolitical risks yesterday markets were contending with headlines coming from the IMF’s spring meetings. There was some speculation that the Finance Ministers of the US, Japan, and South Korea held talks to discuss the recent sharp fall in the Japanese yen and Korean Won.
- The dollar index slipped a touch helping to push USDJPY off its recent highs back toward 154. This also helped the pound and single currency to rally a little, however EURUSD continues to trade below 1.07 and cable remains capped at 1.25.
- The outlook for US interest rates and the timing of potential cuts from the Fed keep the greenback elevated and yesterday Cleveland Fed President Loretta Mester said that monetary policy is in a good place, adding that the Fed should not be in a hurry to cut interest rates. Mester still expects inflation to fall further but wants to see more data to gain confidence that it is moving back towards the central banks 2% target. This afternoon we look forward to the release of weekly US jobless claims and the Philly Fed Business Outlook which is expected to show activity declining again after two months of expansion.
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