Daily Market Pulse

The USD gained 0.1% yesterday, tracking Treasury yields that turned sharply higher, with 10-year Treasuries gaining 8.5 basis points to near one-month highs. Contributing to this movement was the US Conference Board’s May consumer confidence indicator, which saw its first increase since January. Federal Reserve President Kashkari spoke at two events yesterday, during which he was quoted as saying, "I don’t think anybody has totally taken rate increases off the table … I think the odds of us raising rates are quite low, but I don’t want to take anything off the table.”

The US data slate is quite light today, while tomorrow brings key core PCE data and the second estimate of Q1 GDP. Fed officials Bowman, Kashkari, Cook, and Daly are scheduled to speak today. Elsewhere, South Africans head to the polls to vote in their general election today, with full results expected after the weekend.

EUR/USD closed flat yesterday, falling 0.25% at today’s lows but has since recovered early in the North American session. German CPI readings were slightly mixed, with a lower month-over-month reading (0.1% vs. 0.2% expected) but a slightly higher year-over-year level (2.8% vs. 2.7% expected). Earlier, several German regional inflation releases showed slower month-over-month results compared to the prior month. The next ECB decision is on June 6.

GBP/USD fell 0.1% yesterday and is down 0.15% today, though it is trading slightly higher than this time last week. The remaining significant data this week includes Friday’s housing prices and mortgage approvals readings. The November BOE decision remains fully priced in, though those odds have been declining over the past week. The next BOE rate decision is on June 20.

USD/CAD rose 0.1% yesterday and is up nearly 0.3% this morning, trading essentially flat compared to this time last week. The domestic employment household survey results are released tomorrow, with March GDP data coming out on Friday. The next BOC decision is on June 5, with implied odds indicating a BOC cut by the July decision remaining fully priced in.

AUD/USD traded mixed overnight after April CPI data came in stronger than expected at 3.6% (versus 3.4% consensus), marking its second straight monthly increase in the year-over-year inflation level. These results bolster the case for the RBA to leave rates on hold for an extended period, with some analysts even suggesting a potential hike before policy easing expected later this year. After initially trading mixed following the release, the AUD is now down 0.3% this morning.