EARLY yesterday, the US dollar was neutral against its major trading partners ahead of a busy day of Federal Reserve officials’ appearances ahead of the release of April consumer inflation data today.
However, following the Federal Reserve’s 50-basis-point rate hike and a mixed April employment report last week, investors will be searching for any hints from Fed policymakers at their June 14-15 meeting.
Most experts predict another 50-basis-point rate hike at that meeting, but there are concerns that a larger 75-basis-point hike may be required at some point to combat inflation.
Also on the schedule are New York Fed President John Williams, Fed Governor Christopher Waller, and Cleveland Fed President Lorretta Mester are all FOMC voters this year and will speak on Tuesday.
Atlanta Fed President Raphael Bostic, Richmond Fed President Tom Barkin, and Minneapolis Fed President Neel Kashkari are also on the agenda, though they will not vote in 2022.
The weekly Redbook retail sales report and the Investors’ Business Daily consumer sentiment reading, the first for May, round out the relatively light data agenda.
According to the National Federation of Independent Businesses, small company sentiment remained constant in March, below the historical average, due to persistent concerns about inflation and a skilled labor shortage,
Based on a short review of foreign exchange activities heading into Tuesday, GBP-USD increased to 1.2355 from 1.233 at Monday’s US closing and 1.2347 at the same time Monday morning.
Also according to figures released overnight, retail sales in the United Kingdom surprisingly dipped in April after a smaller drop in March.
There are no Bank of England speakers scheduled for Tuesday. The next meeting of the BOE is planned on June 16.
Also the EUR/USD dipped to 1.0549 from 1.0559 at the US close on Monday, and was nearly flat from 1.0548 early Monday.
According to data released earlier Tuesday, the EU ZEW economic index rose above the breakeven point in May following two months of negative readings.
Luis de Guindos, a member of the European Central Bank, comments today as the ECB is expected to keep rates unchanged at its June 9 meeting.
The USD-JPY plummeted to 130.0234 from 130.3276 at Monday’s US close, a significant drop from the 131.1489 level on Monday morning.
And athough COVID-19 limits were lifted in March, household spending in Japan remained poor for the whole quarter. Unlike other major countries, the Bank of Japan believes that greater easing is required to boost growth.
