Fed's Mester: Will likely need to hike rates one more time this year

Lallalit Srijandorn FXStreet

Federal Reserve Bank of Cleveland President Loretta Mester speaks on her economic outlook on Monday, per Reuters.

Key quotes

"Monetary policy path depends on how economy performs."

"Fed will likely need to hike rates one more time this year."

"Economy on ‘good path’ amid ongoing rebalancing of supply and demand."

"Job market strong but slowing, coming into better balance."

"Inflation ‘too high’ but sees welcome signs of progress lowering price pressures."

"Fed will need to keep rates high to ensure return to 2% inflation."

"Economy has grown more strongly than expected."

"Risks to inflation tilted toward upside."

"Credit conditions have tightened in line with monetary policy."

"Sees some signs wage pressures are easing."

Market reaction

As of writing, the US Dollar Index was unchanged on the day at 107.03.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.