Forex news for US trading on May 18, 2016:
- FOMC Minutes: Most officials saw June hike 'likely' if economy warranted
- Japan watching market for speculative yen trading - Nikkei
- EIA weekly US crude oil inventories +1310K vs -3500K expected
- Martin Wolf hates Trump even more than he hates a Brexit
- March Canadian international securities transactions +$17.2B vs +$15.94B prior
- QE has a positive impact on growth, jobs and prices says Draghi
- US MBA mortgage applications -1.6% vs 0.4% prior
- Latest IPOS Mori Brexit poll sees Remain leading with 55%
Markets:
- Gold down $22 to $1257
- WTI crude down 50-cents to $47.81
- S&P 500 flat at 2047
- US 10-year yields up 8 bps to 1.85%
- GBP leads, AUD lags
The Fed Minutes hogged the spotlight today because of a light economic data calendar but they delivered in a big way. The Minutes were more hawkish than almost anyone was anticipating and they put a June hike right back on the table. The implied probability jumped to 32% from 14% beforehand.
The US dollar jumped too. EUR/USD dropped down to 1.1219 from 1.1293 with 80% of the move coming instantly. In a sign of how off-side the market was heading into the release, it had hit a session high only minutes beforehand.
USD/JPY climbed above 1.1000, taking out the psychological level to the highest since April 28. It's looking increasingly likely the full BOJ move will be retraced.
Cable had been on fire ahead of the FOMC Minutes with polls and bookies showing a Brexit is less likely. It was the best day in three weeks for the pair as it hit a session high of 1.4635 ahead of the Minutes and the was slammed down to 1.4575 afterwards.
The biggest mover on the release was USD/CAD, partly because the US dollar gains also sparked a reversal in oil. USD/CAD went from a session low of 1.2889 ahead of the Minutes to 1.2995 afterwards and eventually hit 1.3037 -- a five week high.
AUD/USD broke and closed below the 200-day moving average for the first time since March. Before the FOMC Minutes, the pair had been in a steady climb up to 0.7300 from 0.7250 but dropped down to 0.7229 afterwards.
Gold was hit hard on the Minutes as well, galling to $1256 from $1280. That's the lowest since April 28.
