Dollar Mixed as Markets Seek Assurance of Fed’s Cautious Move
The US dollar was mixed against its major trading partners early Monday before a quiet data schedule that is highlighted by the release of the May Empire State index, the first manufacturing reading for the month.
Markets are looking for more reassurance that the Fed will move cautiously in its fight against inflation rather than act with large rate increases of 75 basis points.
A quick summary of foreign exchange activity heading into Monday shows that USD-JPY rose to 129.45 from 129.194 at the Friday US close and 128.8902 at the same point Friday morning.
Japanese producer prices jumped at a record pace in April, data released overnight showed.
Even with rising inflation, the emphasis for the Bank of Japan is still on supporting growth. As a result, the Bank of Japan is expected to keep interest rates low for an extended period, in contrast to other major economies.
USD-CAD rose to 1.2923 from 1.2906 at the Friday US close but was down modestly from 1.3001 at the same point Friday morning. The Bank of Canada is expected to raise rates by 50 basis points at its next meeting on June 1, with an outside chance of a larger increase.
EUR-USD rose to 1.0423 from 1.0408 at the Friday US close and 1.0386 at the same point Friday morning. The Eurozone reported a larger trade deficit in March than in April according to data released earlier Monday.
Comments from European Central Bank officials suggest that a rate hike is possible in July after an expectation of no change at the June ECB meeting. GBP-USD was virtually unchanged at 1.2261 from 1.2262 at the Friday US close, up from 1.2207 at the same time Friday morning. READ: Bitcoin Sheds 5% over Fed’s Chairman Dovish Talk
There are no UK data scheduled for release on Monday. The Bank of England’s next meeting is scheduled for June 16, when another rate increase of 25 basis points is expected. #Dollar Mixed as Markets Seek Assurance of Fed’s Cautious Move