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Greenback Under Pressure Despite Hawkish Fed Tweaks

FOREX
  • Immediate two-way price action for US treasuries in the aftermath of the May Fed statement release was echoed in currency markets. A very moderate pop higher for the greenback failed to garner any momentum and the USD index saw a swift reversal to fresh session lows.
  • As Chair Powell’s press conference continued, the greenback slid in sympathy with US yields as Fed Powell emphasised the well anchored longer-term expectations and highlighted it is unlikely that the next policy move would be a hike. With the market potentially setting a high hawkish bar heading into the today’s meeting, the most recent greenback optimism faded.
  • USDJPY traded as low as 157.01, 98 pips off the overnight highs and EURUSD narrowed the gap towards the week’s best levels, briefly operating back above 1.0730.
  • Markets have since stabilised a touch and the USD index is roughly 0.3% lower as we approach the APAC crossover.
  • With equities buoyant throughout the late US session, AUD and NZD are outperforming, both up close to 0.75% on the session.
  • Initial resistance for AUDUSD has been defined at 0.6587, Monday’s high. Clearance of this level would be bullish and signal scope for a climb towards 0.6644, the Apr 9 high.
  • Bank of Japan minutes highlights the APAC docket on Thursday before Swiss CPI will be in focus during the European session. Jobless claims in the US will provide a warm-up for the US employment report scheduled on Friday.
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  • Immediate two-way price action for US treasuries in the aftermath of the May Fed statement release was echoed in currency markets. A very moderate pop higher for the greenback failed to garner any momentum and the USD index saw a swift reversal to fresh session lows.
  • As Chair Powell’s press conference continued, the greenback slid in sympathy with US yields as Fed Powell emphasised the well anchored longer-term expectations and highlighted it is unlikely that the next policy move would be a hike. With the market potentially setting a high hawkish bar heading into the today’s meeting, the most recent greenback optimism faded.
  • USDJPY traded as low as 157.01, 98 pips off the overnight highs and EURUSD narrowed the gap towards the week’s best levels, briefly operating back above 1.0730.
  • Markets have since stabilised a touch and the USD index is roughly 0.3% lower as we approach the APAC crossover.
  • With equities buoyant throughout the late US session, AUD and NZD are outperforming, both up close to 0.75% on the session.
  • Initial resistance for AUDUSD has been defined at 0.6587, Monday’s high. Clearance of this level would be bullish and signal scope for a climb towards 0.6644, the Apr 9 high.
  • Bank of Japan minutes highlights the APAC docket on Thursday before Swiss CPI will be in focus during the European session. Jobless claims in the US will provide a warm-up for the US employment report scheduled on Friday.