The USD fell 0.25% yesterday after the second reading of US Q1 GDP (1.3%) grew at a slower pace than the first reading (1.6%), though it met expectations. Federal Reserve President Williams stated there is "ample evidence" that current policy is restrictive, adding that he expects inflation to resume moderating in the second half of this year. When asked about the likelihood of supporting policy easing, Williams said, "I don’t feel any urgency or need to make a decision now."

China’s May PMIs missed forecasts overnight, with the manufacturing PMI in contractionary territory at 49.5, marking the first monthly contraction since February 2024. This morning's data showed the Fed’s preferred gauge of inflation moderated to 0.2% in April and 2.8% year-over-year. The USD is trading 0.2% lower today, with month-end flows expected to bring USD selling pressure.

EUR/USD rose 0.3% yesterday and has gained another 0.35% today after Eurozone inflation data came in stronger than expected. Headline and core CPI were 2.6% and 2.9% year-over-year, compared to expectations of 2.5% and 2.7%, respectively. ECB member Panetta spoke this morning, suggesting that even after several rate cuts, he believes the monetary policy stance will remain tight. Implied swap odds currently price a 98% chance of a rate cut at the ECB decision on June 6.

GBP/USD gained 0.25% yesterday and is up another 0.2% today, trading about 0.25% higher than this time last week. Housing price data beat expectations this morning with a year-over-year gain of 1.3% versus a 0.9% consensus. The data slate is light over the next week, with PMI metrics being the focus. The next BOE rate decision is just under three weeks away on June 20. The next decision date that is fully priced for a rate cut is in November.

USD/CAD fell 0.25% yesterday and is down another 0.35% this morning, trading roughly 0.35% lower than this time last week. A household employment survey released yesterday indicated a strong +51.4k job additions in March, with the prior month’s reading of -17.7k revised upwards to +14.6k. March economic growth came in flat this morning, leading to a miss on year-over-year (0.6% versus 0.7% consensus) and Q1 (1.7% versus 2.2% consensus) growth. Implied swap odds price just over an 80% likelihood of a rate cut at the BOC decision on June 5.