Here, USD/JPY could grind back to the 141 area.Īlso, look out for weekly US crude inventory data later today. DXY could trade in a 104.00-104.50 range and if the Fed policy rate could be flatlining after all this summer then expect further interest in the carry trade. However, we doubt the dollar will go too far ahead of tomorrow's more important jobs and wage data. A slightly better external environment - China's small-business PMI was better than expected in May - could see the dollar edge marginally lower were US data to come in on the soft side today. That suggests this current dollar dip does not need to run too far.Īhead of tomorrow's May nonfarm payroll report, today sees the release of ISM Manufacturing, Initial Claims and the ADP employment report. Perhaps there were some early signs that pressures in the tight labour market were easing - but nothing to support any recessionary narrative. It was hard to identify any clear signs of slowing activity and consumption was holding up well. The release of the Fed's Beige Book last night looked reasonably positive. While that new strategy does provide some flexibility for the Fed, the data will be a key determinant on whether indeed it does skip the June hike. That term 'skip' first entered the Fed lexicon with remarks from Christopher Waller last week and suggests the Fed is indeed starting to use a new communication tool for gracefully ending its tightening cycle. Having enjoyed a decent rally on the back of some surprisingly strong JOLTS job opening data, the dollar sold off late yesterday on a couple of Federal Reserve speakers (Patrick Harker and Philip Jefferson) suggesting that the Fed could potentially 'skip' a rate hike at the June meeting - but leave the door open for a July hike. USD: We're hearing more of this term 'skip'
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