- After several days of losses, the US dollar bounced back yesterday edging a touch higher after an improved Consumer Confident report and hawkish Fed comments backed up recent sentiment that the US central bank is in no rush to cut interest rates. May’s Consumer Confidence jumped to 102.0 from 97.5 despite many analysts predicting a small drop. Non-voting Minneapolis Fed President Neel Kashkari yesterday said that growth remains robust, and whilst interest rate hikes are not off the table, the odds of further tightening remain quite low. He again urged caution, saying, “is the disinflationary process continuing or are we landing to more of a 3% inflation level. I think it’s still too early to know and we need to wait and see to get more confidence.”
- US Treasury yields were mixed as the greenback gained a touch pushing the single currency off its recent high. EURUSD looked set to finally breach its stubborn resistance at 1.09 with the pair getting within touching distance before falling after the Consumer Confidence data came out. EURUSD slipped to support at 1.0850 where it consolidates ahead of German inflation data due this morning.
- The pound is consolidating, with the lack of UK data this week keeping GBPUSD capped at 1.28 which was briefly tested yesterday. Cable remains one of the best supported G10 pairs and has enjoyed a decent run over the past few months, trading towards the top of its recent range as the timing of the first BoE cut continues to be pushed further out.
- We have the release of the Fed Beige book overnight and month end flows are expected to kick in which are expected to see the greenback being sold.
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