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The Greenback woke up on the right side of the bed this Monday as FOMC member Dudley dropped a few hawkish beats during his testimony. Meanwhile, Brexit talks have already kicked off and European currencies are already feeling jittery.

  • FOMC member Dudley: “Very confident” that U.S. economy can keep growing
  • Dudley: U.S. growth is well-distributed across the country
  • Dudley: U.S. is close to full employment, wage growth consistent with productivity
  • Australian CB leading index down from 0.6% to 0.5%

Major Events/Reports

Upbeat remarks from Dudley

FOMC policymaker William Dudley gave dollar bulls a reason to charge when he struck an optimistic tone during his testimony, underscoring the Fed’s plans to carry on with its tightening timeline.

Dudley mentioned that he is “very confident” with the U.S. economic expansion and that growth is well-distributed across the country. He also highlighted how the U.S. is pretty close to full employment and that wage growth is consistent with productivity.

Aside from that, Dudley also assured that wages will pick up once productivity growth does. He even noted that “halting the tightening cycle would imperil the economy” to hint that he would likely vote for another rate hike before the end of this year.

“Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2%,” Dudley said.

Brexit negotiations underway

Today marks Day 1 of what could be a long period of Brexit talks and, true to schedule, the principal negotiators set a timeline for their discussions. The next meetings are set to take place on July 17, September 18, and October 9 so mark your calendars, fellas!

On the agenda are proposals for EU citizens’ rights after the split and that financial settlement, which may or may not involve the hefty bill that the U.K. government is being forced to pay. A source noted that the talks have been “incredibly positive” and that David Davis believes that a “promising start” was made.

Risk appetite in play?

Even with the uncertainty in Europe, U.S. markets seem to be feeling chipper as the tech sector chalked up a rebound and indices are closing at new highs.

  • S&P 500 index is up to 2,447.50 (+0.68%)
  • Nasdaq is up to 5,769.00 (+1.50%)
  • Dow 30 index is up to 21,528.99 (+0.68%)

Commodities are in the red, though, as gold is probably giving up ground while traders dump their safe-haven holdings and crude oil is weighed down by the usual slew of oversupply concerns.

  • Gold is down to $1.244.85 per troy ounce (-0.92%)
  • WTI crude oil is down to $44.33 per barrel (-1.42%)
  • Brent crude oil is down to $46.87 per barrel (-1.10%)

Major Market Mover(s):

EUR & GBP

European currencies were weaker across the board as Brexit-related uncertainties kept gains in check.

EUR/USD is down 48 pips to 1.1149 (-0.43%), EUR/CAD is down 61 pips to 1.4731 (-0.41%), EUR/AUD fell from 1.4711 to 1.4673 (-0.13%), GBP/USD is down 44 pips to 1.2735 (-0.34%), and GBP/CAD dropped to 1.6872 (-0.41%).

Commodity Currencies

In contrast, the comdoll gang was propped up by risk appetite, especially against the yen and European currencies.

AUD/JPY is up 24 pips to 84.73 (+0.28%), CAD/JPY is up from 83.94 to 84.38 (+0.61%), and NZD/JPY is up from 80.43 to 80.60 (+0.30%).

Watch Out For:

  • 12:00 am GMT: FOMC member Evans’ testimony
  • 2:30 am GMT: RBA meeting minutes
  • 2:30 am GMT: Australian HPI q/q (2.2% expected, 4.1% previous)