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May 22 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Hit By FOMC Minutes After UK CPI Blow

By Paul Spirgel  —  May 22 - 03:05 PM

The USD index rose 0.3% to 104.93, strengthening after minutes from the Fed's latest meeting showed policymakers were concerned about persistent inflation.

Despite a recent slide amid diminished tail risk of a rate hike, the steady Fed rate outlook is keeping the dollar bid.
LSEG’s IRPR page still has 80% odds for the first U.S. rate cut in September, with less-than a 50% chance for a hike in August.

EUR/USD dropped 0.29% to 1.0823, sliding after the Fed minutes.
Earlier, EUR/USD had followed EUR/GBP lower after data showed UK inflation fell less than expected, which had tempered dovish UK rate expectations.

USD/JPY rose 0.24% to 156.55 and was holding near the top of Wednesday’s 156.63-12 trading range in U.S. afternoon trade.
The dollar remains bid as U.S.-Japan rate differentials continue to favor the dollar.

The consistent chorus of Fed speakers expressing concern about U.S. inflation persistence and market expectations of steady rates until September 2024 are helping to keep USD/JPY anchored near the May 14 high at 156.80.

GBP/USD rose to an early Europe high at 1.2761 after UK CPI, though those peaks were short-lived.
Price action suggested recent GBP/USD buyers had sold into post-data strength awaiting further clues to the UK inflation and rates.

The pound found a slight bid in late European trading after PM Rishi Sunak announced upcoming UK elections slated for July 4, but those gains were reversed after the less-dovish Fed minutes.

Gold slid 1.8% to $2,378, with the Fed minutes exacerbating earlier weakness.
Bitcoin weakened 0.44% to $69.4k, and ethereum slid 0.7% to $3,720.
ETH remains anchored near highs as market awaits news on ETH ETF registrations.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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