USD: The greenback remains firm following yesterday’s commentary from uber-dove Bullard, who reigned in expectations that the Fed could provide a surprise in going ahead with a 50bps cut, having stated that such a move would be overdone. However, with the Fed still expected to ease monetary policy next month, the bounce in the USD could be somewhat temporary, particularly as US data looks set to continue to soften with risks tilted to the downside for next week’s ISM report.
NZD: RBNZ kept the OCR on hold at 1.5% overnight as widely expected. Consequently, the Kiwi rose following the decision amid the unwind of bets calling for a 25bps cut at the meeting. However, the RBNZ have continued to signal that further easing is likely to be warranted, thus consensus is for another rate cut at the August meeting.
EUR: Despite the pullback from the 1.14 handle, the pair has managed to hold above the 200DMA at 1.1346. Alongside this, while the sentiment in the USD continues to deteriorate as the Fed looks to cut interest rates, possibly as soon as July, this could provide underlying support for the Euro, given that the Fed has more firepower than the ECB in regard to interest rates, while the sizeable short positioning in the Euro raises the prospect of a further short-squeeze.
Source: DailyFX, Thomson Reuters
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