US Dollar Shrugs Off Trump-Kim Summit, Eyes FOMC And ECB

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The US Dollar (via DXY Index) is carving out a doji candlestick on Tuesday as price action has proven indecisive around notable developments in the news. Primarily, with the Trump-Kim denuclearization summit concluding in Singapore, traders may have been expecting a more potent reaction in the G10 FX space.

Beyond a bump in USD/JPY (with the Japanese Yen serving as a regional safe haven), the impact has been minimal: US equity futures are trading flat; and Gold is back lower, even if only marginally.

But to a certain extent, a big market move resulting from the Trump-Kim summit would probably have been on the heels of a negative surprise out of the summit, rather than an agreement that lacks any teeth. Instead, traders will be looking to the slate of upcoming economic data out of Europe and North America for far more potent catalysts over the coming 48-hours.

Attention is quickly shifting to the Federal Reserve's June policy meeting tomorrow, starting with today with the release of the May US CPI report. Incoming inflation data for May will show that both measures of the US Consumer Price Index are above the Federal Reserve’s medium-term target of +2%. Headline CPI is due in at +2.7% from +2.5%, and Core CPI is due in at +2.2% from +2.1% (y/y).

On the doorstep of the June FOMC meeting, these readings may help underscore a hawkish tone at the forthcoming rate decision that leaves the door open for four cumulative hikes in 2018. However, given that a June hike is already 100% priced-in, it would seem that the May US CPI release will only impact markets if rate pricing for the September and December 2018 meetings moves.

Disclosure: Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment ...

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