‘Slightly pessimistic and uncertain’ was the characterization of the US perspective expressed in the Fed Beige book published last night and before the next FOMC meeting on June 19. However, the business feeling did not show a clear deterioration compared to the previous Beige books, and the report also pointed out that ‘there were generalized contact reports that expect costs and prices to increase at a faster rate in the future’. This last point keeps the FED resistant to the growing political pressure to cut rates, says Chris Turner, an Ing currency analyst.
The USD is susceptible to more falls
“The softest data in the United States have weighed a little about the USD, even when the commercial war has had a relatively quiet week. Instead, there is still an approach to progress – or the lack of this – of the fiscal bill of President Trump. In an update yesterday, the Congress Budget Office now expects the bill to add 2.4 billion dollars to the US budget deficit during the next decade. Despite this, the US bond market is quieter.
Despite this week’s relative calm – including the MSCI World Actions Index reaching a new historical maximum – negotiated exchange volatility remains relatively high. These levels for the EUR/USD and the USD/JPY are still negotiated above 8% and 11% respectively for the month. And, notably, the temporary structure of the negotiated volatility curve shows a break in the two -month tenor – no doubt that the 90 -day pause of President Trump about the tariffs of the ‘Day of Liberation’ ends on July 9 and could be followed by another wave of hard tariff rhetoric. “
“All this leaves the USD gently offered and susceptible to more falls if US data point in that direction. Today’s reduction in the April commercial data should actually be positive for the GDP of the second quarter, but the market will probably pay more attention to the initial data of weekly unemployment applications, since investors are attentive to signals of layoffs. However, the currency movements can be Moderate, in advance of tomorrow’s NFP data.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
