Daily Financial Markets Update: FOMC Minutes Revive June Hike Hopes

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The minutes of the latest FOMC meeting turned out more hawkish than expected, as several Fed officials still maintained that a June rate hike is on the table. In particular, committee members noted that they could vote to tighten if the US economy is able to maintain its pace of growth, inflation, and hiring. However, policymakers also pointed out concerns about a potential Brexit and unanticipated changes in China’s exchange rate.

Still, the US dollar rallied from revived June hike speculations. USDJPY popped above the 109.00 handle to a high of 110.35, EURUSD fell below 1.1250 to a low of 1.1220, AUDUSD slipped to a low of .7209, USDCAD rallied past the 1.3000 handle, and NZDUSD is down to .6750.

GBP cheers Brexit polls, UK jobs

The pound was also one of the stronger performing currencies in recent trading sessions, lifted by opinion polls showing that the anti-Brexit camp is increasing its lead against those voting to leave the EU. In addition, the UK jobs report printed stronger than expected results, showing a 2.4K drop in unemployment claimants for April versus the projected 4K increase. Wage growth was also seen as the average earnings index recovered to 2.0% instead of falling from 1.8% to 1.7%.

GBPUSD surged to a high of 1.4635 and is able to hold steady above 1.4600, GBPJPY rallied to a high of 160.95, EURGBP broke below the .7750 support onto the .7700 handle, and GBPCHF is testing the resistance at 1.4400. UK retail sales data is due today and a 0.6% rebound in consumer spending is eyed, following the previous 1.3% drop.

Loonie slides on oil inventories buildup

The Canadian dollar returned most of its recent gains as the US crude oil inventories report showed a buildup of 1.3 million barrels even with the supply disruptions in Nigeria, Venezuela and Canada. In Australia, the jobs report came in slightly weaker than expected with a 10.8K increase in hiring versus the estimated 12.1K rise. The jobless rate held steady at 5.7% instead of rising to 5.8% as labor force participation declined.

Comdolls are looking mostly weaker so far, as traders continue to price in additional easing from their respective central banks. Canadian retail sales and CPI figures are up for release tomorrow, with downbeat results likely to spur more losses for the Loonie. CADJPY is down to 84.24, EURCAD is up to 1.4650, and GBPCAD is trading past the 1.9000 handle.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.