US Dollar remains bullish against European pro-cyclical currencies – ING
US data and communication from the Federal Reserve (Fed) appear to be in a 'tug-of-war'. If the Fed stayed relatively dovish in the first quarter despite the slow disinflation, last week’s FOMC meeting and communication afterwards were relatively hawkish, ING FX Strategist Francesco Pesole notes.
Fed is still hawkish, US is on holiday
“Retail sales for May were weaker than expected yesterday and a downward revision to the April print was also published. The reading is in line with our view that consumer spending has peaked in the US. On the flipside, May’s industrial production rebounded more than expected.”
“The general message from Fed sent to markets is one of caution on disinflation. New York Fed President John Williams refused to comment on the timing of the first rate cut and while he admitted some encouraging signs on inflation. Seems, there is not enough confidence in the data to trigger a dovish turn in communication.”
“US markets are closed for a federal holiday today. Even on Thursday and Friday, the data calendar in the US is not very heavy: central bank developments and political risk swings in Europe will be more central. We still think that the US Dollar should keep finding some support against European pro-cyclical currencies.”
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FXStreet Insights Team
FXStreet
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