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  • One-way traffic in currency markets Friday saw the USD rally further, putting the USD Index at new multi-month highs and within range of the March highs of 93.44. These USD gains were mostly felt against NOK, NZD and GBP, which underperformed all others in G10.
  • Evidence of the FOMC's tilting hawkish bias further emerged as St Louis Fed's Bullard stated that it may become appropriate for the Fed to begin hiking interest rates next year in the face of above-target inflation. Bullard said "I put us starting in late 2022" when talking about rate liftoff.
  • GBP/USD underperformed throughout following a set of weaker-than-expected retail sales figures. Retail sales fell 1.4% on the month, well below the expected gain of 1.5%, raising questions about the UK's post-pandemic recovery, which has been fuelled by solid consumption. By-election results in the UK also went against the ruling Conservative party, adding additional pressure to GBP/USD. The pair touched 1.3785 Friday, the lowest level since mid-April.
  • Focus in the coming week turns to the Bank of England rate decision, German IFO figures and the May personal income/spending data from the US.