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Markets looking forward to Federal Reserve minutes

Daily Currency Update

Markets remain volatile with the prospect of the Federal Reserve remaining hawkish in its path to drive down inflation. The focus will be on the minutes of the latest Federal Reserve meeting for further monetary policy guidance.

The market is now pricing U.S. interest rates to peak at 5.30% in July and remain above 5% by the end of the year, moving away from expectations of deeper rate cuts this year.

The US dollar was just shy of recent peaks as a three-week rally faded, with investors now looking forward to US manufacturing data later today and Friday’s core PCE price index could further support the USD.

Key Movers

In Europe, today's PMI surveys suggest that the business activity in the private sector stayed relatively healthy, this could be seen as a development that can allow the European Central Bank to continue to tighten its policy rate after March and help the Euro.

On Monday, ECB Governing Council member Olli Rehn told Börsen-Zeitung that the ECB could continue to hike its key rates after March and reach the terminal rate later in the summer.

Expected Ranges

  • GBP/USD: 1.1965 - 1.2045 ▼
  • GBP/EUR: 1.1205 - 1.1285 ▼
  • EUR/USD: 1.0625 - 1.0695 ▼