USD slows as a pause in rate hikes considered
Daily Currency Update
The US dollar drifted from a two-month high this morning as traders trimmed bets the Federal Reserve will raise interest rates this month, though a vote of approval from the US House to suspend the debt ceiling provided some support to the US dollar.Fed officials have pointed towards a rate hike "skip" in June, giving time for the US central bank to assess the impact of its tightening cycle so far against the high inflation data. Markets have now lowered their pricing so that the Fed will raise rates by 25 basis points at its upcoming meeting.
Key Movers
Today's May inflation report out of the Eurozone could be of high importance. Economists are eyeing a modest easing in the headline number (to 5.5% from 5.6%), and a rather sharp drop in the core print (to 6.3% from 7.0%). A confirmation or downside surprise in the latter would be a significant development, as it may take some pressure off the European Central Bank to continue raising interest rates at its upcoming meetings.Expected Ranges
- GBP/USD: 1.2385 - 1.2465 ▲
- GBP/EUR: 1.1605 - 1.1675 ▲
- EUR/USD: 1.0605 - 1.0685 ▲