Yesterday saw the greenback clock up gains following the release of the latest Federal Reserve meeting minutes. It was a game of 2 halves that saw dollar weakness in European trading followed by strength in the American and Asian sessions. Sterling dropped to the $1.22 handle while EURUSD retreated after a failed attempt at taking the $1.10 resistance level.
The Fed meeting minutes continued to paint a cautious tone. The US central bank discussed many scenarios for how the domestic economy will emerge from this crisis. They also examined many different policy tools, some of which may be deployed in the future if the situation should warrant it. The buck extended its recovery after this release which saw it notch up small gains against the pound late in the evening and overnight into this morning.
Today sees European and US flash PMIs for May. Many participants will be hoping for marginal bounces in their respective readings just as various economies begin to take ultra-small steps towards normalising.
Elsewhere, interest rate decisions will be seen coming out of both Turkey and South Africa today with both central banks expected to decrease cash rates. From the US, weekly initial jobless claims will get significant attention. We’ll also see regional US business activity gauges as well as existing homes sales numbers and some Federal Reserve speeches including Chairman Powell himself.
Written by Viv Savani. 8:35am, May 21st 2020
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