Marketwatch North America

Daily Insights
June 11, 2024

The U.S. Dollar Index is +1.17% over three days, atypical short-term volatility for the leading safe-haven currency. Friday’s Nonfarm payroll blowout (272k jobs added vs. 180k estimate) shaved nearly a full cut from the implied O/N rate through December. A stubbornly strong labor market, with its accompanying wage inflation and downstream lift to consumer spending limits the Fed’s near-term alternatives on rate policy.

Today is the first day of the FOMC’s 2-day policy meeting which culminates with tomorrow’s rate decision announcement, set for release tomorrow afternoon. No change is expected to the 5.50% overnight target rate with an only 1.3% implied probability of a cut. After this week, the FOMC will have four remaining policy meetings through the end of the year. The highest probability of a cut is 66.1% at the final meeting of the year, December 18th.

Along with the FOMC’s rate decision, tomorrow’s economic calendar also includes the CPI (consumer price inflation) print for May. Yearly CPI is estimated to be 3.4%, matching April’s result. The MoM CPI is forecast to drop to a 0.1% gain, retreating from April’s 0.3%. Monthly CPI has dipped to 0.1% five times since August 2022 and topped out at 0.5% three times over the same period. So, anything between 0.1% and 0.5% will be more of the same.

Today’s primary dollar spot gains vs. the G10/majors: +0.66% vs. MXN, +0.46% vs. NOK and +0.29% vs. EUR. The widest dollar loss is -0.14% vs. JPY.

USDMXN continues to be bid higher following last week’s elections, the Morena party winning the presidency (as expected), winning 372 seats in the lower house (a surprise), and gaining 83 senate seats (a strong showing). Morena needs 86 senate seats for a ‘supermajority’ coalition to enact its desired constitutional reforms. Departing President Obrador is in the process of negotiating with a handful of senators to achieve a supermajority status to leave with incoming president Sheinbaum (Obrador’s political protégé).

Economic Calendar

USD - NFIB Small Business Index
AUD - NAB Business Confidence
JPY - Prelim Machine Tool Orders y/y
CAD - Building Permits m/m
USD - 10-y Bond Auction
JPY - PPI y/y
GBP - Claimant Count Change
GBP - Average Earnings Index 3m/y
GBP - Unemployment Rate
GBP - CB Leading Index m/m
NZD - Visitor Arrivals m/m

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 157.392 156.805
eur/usd 1.07734 1.07237
gbp/usd 1.27494 1.27136
aud/usd 0.66099 0.65884
usd/cad 1.37842 1.37548
eur/gbp 0.84678 0.84188
usd/mxn 18.5583 18.3058
Equities and Commodities
S&P 500 5352.12
NASDAQ 19034.9
DOW 38735.6
GOLD 2316
SILVER 29.34

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.