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Atlanta Federal Reserve President Raphael Bostic said, on Monday, that if he were voting now, he would vote to hold rates in June, but warned that he has to keep a possible rate hike on the table. He also forecasts inflation to be in the high 3s by year-end, and market participants are pricing in a pause at the FOMC’s June meeting.
Bostic’s comments triggered no surprises, as market participants are currently pricing in a pause at the FOMC’s June meeting. The US Dollar Index is falling by 0.30% on Monday, trading near 102.50.
Traders and investors are watching closely the US debt ceiling row. The White House announced that President Biden will meet on Tuesday with House Speaker Kevin McCarthy.
The US Dollar dropped on Monday, as equity prices rose modestly in Wall Street. US yields rose again, with the 10-year Treasury yield climbing above 3.50%, and the 2-year above 4.0%.
EUR/USD rose from monthly lows and closed around 1.0870. The Euro lagged on Monday; Eurozone GDP and Employment data are due on Tuesday.
Economic Data
Economic data from the US surprised to the downside, with the New York Empire Manufacturing falling from 10.8 to -31.8, the largest fall since April 2020. On Tuesday, the Retail Sales data is due.
Key developments
Gold price is struggling to defend the week-start corrective bounce amid mixed sentiment. Anxiety ahead of the top-tier United States data, debt ceiling talks prod XAU/USD buyers. Meanwhile, the US Dollar bears take a breather amid hawkish Federal Reserve talks.
Also challenging the XAU/USD’s week-start corrective bounce are the mixed updates from the United States data and Federal Reserve (Fed) talks, not to forget unclear statements from the US policymakers ahead of the key debt ceiling talks scheduled for 19:00 GMT.
The precious metal benefits from the downbeat US Dollar and hopes for more demand from China, one of the key XAU/USD consumers. Also underpinning the price upside could be the scheduling of the US debt ceiling negotiations after postponing the talks on Friday.
GBP/USD jumped back above 1.2500 and EUR/GBP posted the lowest daily close in five months below 0.8680. The UK will report employment on Tuesday.
The Japanese Yen was the worst performer, affected by higher government bond yields. USD/JPY rose for the third consecutive day, climbing above 136.00.
AUD/USD rebounded, erasing Friday’s losses and retaking 0.6700. The Reserve Bank of Australia (RBA) will release the minutes of its latest meeting on Tuesday; the Employment report is due on Thursday.
USD/CAD pulled back to 1.3450, weakened by a slide of the US Dollar and a rally in crude oil prices, which rallied 1.80%. Canada will report April consumer inflation on Tuesday.
What to watch on Tuesday
Reserve Bank of Australia will release its policy meeting minutes on Tuesday. Chinese data is also due, while the UK will report employment figures and the Eurozone will provide growth data. Furthermore, US President Biden will meet with McCarthy, and the US will release Retail Sales data.
Read Also:
Yellen: Treasury’s borrowing costs had already increased for early June
USD/CAD dives amid soaring Canadian Dollar, softer USD
Gold defends corrective bounce amid debt ceiling fight
NY Fed: Total household debt rises by 0.9% in Q1
Fed’s Bostic: I would vote to hold rates
GBP/USD soars on emerging bullish-engulfing pattern
