Rollercoaster ride for the USD last night

Published date: 19/07/2019

Fed policy is front and centre as we get closer to the FOMC meeting at the end of the month.  It is worth noting that there is a 1 week blackout period where Fed members are not allowed to communicate any thoughts on policy, so we may hear some more today after the NY Fed president Williams caused a stir last night. 

In comments which were attributed to the meeting at the end of the month, his view that rates could go to zero was seen as an uber dovish tilt which pushed pricing for a 50bp cut out to 70%.  However, his comments were later qualified as more academic rather than relating to current policy thinking and the odds came back in to just under 50%.  As such, the USD sell-off was reined in, but only modestly so as yet, with EUR/USD still trading some 20-25 ticks off the highs, and Cable off by about 30 ticks or so.  

EUR/USD resistance was again tested in the 1.1280-85 area, while Cable hit a wall into 1.2560-70.  USD/JPY also based out ahead of 107.00 and is back above 107.50 but with limited upside momentum.  

Elsewhere, we saw USD/CAD testing 1.3000 again, but we held some 10 ticks or so off this level.  Note, Canadian retail sales are the only release worth looking at later today, so we may see a little more action here.  

NZD remains the outperformer with highs seen around 0.6790 vs the greenback, while the AUD is not far behind having tipped the 0.7080 mark.  

Early price action is cautious in am Europe, as Fed comments last night have certainly questioned USD dominance a little more, so we are not seeing the usual rush to buy the greenback as we have been used to seeing in previous weeks and months.


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