U.S. Session Forex Recap – May 19, 2016

  • FOMC minutes: Some members say June hike might be appropriate
  • FOMC policymakers saw diminished risks from global financial volatility
  • Fed officials concerned about Brexit and Chinese yuan exchange rate

All eyes and ears were on the FOMC minutes, which had traders buzzing about a June hike and spurred a lot of action among dollar pairs.

Major Events:

FOMC meeting minutes – As expected, the release of the FOMC meeting minutes caused a lot of ruckus in the forex charts when it revealed that a number of policymakers believed that a June rate hike might be appropriate. As it turns out, several hawkish members are just waiting to see if incoming reports continue to show progress before they decide to pull the tightening trigger next month.

Fed officials also noted that risks from global financial developments have diminished but pointed out that they’re wary of repercussions from a potential Brexit and unanticipated moves in the Chinese yuan exchange rate. Still, the committee judged that the risks to their inflation projection were tilted to the downside but stayed confident that U.S. economic growth would continue to pick up.

Major Currency Movers:

USD – Thanks to renewed June rate hike expectations, the Greenback raced past its forex counterparts and left higher-yielders eating dust.

EUR/USD fell from a high of 1.1282 to a low of 1.1218, USD/JPY broke out of its short-term consolidation to a high of 110.26, AUD/USD resumed its drop and is down to the .7225 area, USD/CAD is back above the 1.3000 mark, and NZD/USD dipped to a low of .6729.

GBP – The pound carried on with its rallies from the earlier trading sessions, buoyed by a slightly wider lead among anti-Brexit voters.

GBP/USD surged to a high of 1.4635 and is holding steady, GBP/JPY jumped from the 159.00 handle to 160.75, EUR/GBP crashed below the .7800 and .7700 support levels, and GBP/AUD is testing the 2.0200 handle.

Watch Out For:

  • 1:30 am GMT: Australian jobs report (See Forex Gump’s Trading Guide!)
  • 4:30 am GMT: Japan’s all industries activity index (0.7% expected, -1.2% previous)

See also:

Asian Session Recap

London Session Recap

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