USD bounced back yesterday stemming 4 days of consecutive losses, as initial jobless claim pulled back from the previous weeks. GBPUSD and EURUSD both hit the highs seen in April before easing off. Fed officials Loretta Mester and Raphael Bostic continued to sing to the tune that more patience is needed, and that interest rates need to stay higher at this point – market pricing continues to favour a 0.25% rate cut in November, followed by another in December.
*Daily move - against G10 rates at 7:30am, 17.05.24
** Indicative rates - interbank rates at 7:30am, 17.05.24
Quiet day ahead with only the final inflation numbers from Europe due out today, so expect limited impact in markets. We have a host of central bank speakers as well, but given market pricing on interest rates looks fairly comfortable at the moment, we wouldn’t expect much impact from these either. All in all, we expect some stabilisation in markets today. Next week's major data point brings GBP into focus, with the release of our inflation numbers. The key from this will be whether the data increases bets on a June rate cut. For USD, the next major data point will be in two weeks with the release of the core PCE inflation numbers.
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