North American Summary and Highlights 18 Jun
Overview - The USD saw a modest reaction to the FOMC announcement, but ended firmer after Chairman Powell’s press conference.
North American session
Ahead of the FOMC the USD saw a dip after Trump comments that Iran wanted to talk led to slippage in oil, but this was largely reversed. US data was soft, housing starts down by 9.8%, permits down by 2.0% and initial claims still high at 245k if down from 250k, but had little impact.
The response to the FOMC meeting was modest. The USD initially slipped despite marginally higher median dots for 2026 and 2027 (2025 was unchanged) with the statement seeing uncertainty having diminished, while remaining elevated. However, Chairman Powell in his press conference sounded in no hurry to ease and this saw the USD move higher, EUR/USD falling to 1.1470, GBP/USD testing 1.34 and USD/JPY rising to 145.15. USD/CAD reached 1.37.
European morning session
EUR/USD and USD/JPY were both unchanged through the European morning, but there were some gains for GBP and some losses for the SEK after UK CPI and the Riksbank rate cut respectively.
UK May CPI was essentially in line with consensus, but the headline y/y rate was a tad above the median expectation, and with GBP having softened in the past week after the labour market data, it managed a modest recovery, EUR/GBP dropping 10 pips to 0.8545.
The Riksbank cut the policy rate by 25bps as expected, and also signalled the possibility of a further cut this year, turning more dovish since May as the momentum of the economy appears to have stalled on the back of tariffs and geopolitical concerns. They also revised down their 2025 GDP growth forecast to 1.2% from 1.9%. EUR/SEK gained 5 figures to 11.02.
EUR/CHF also gained 20 pips to trade above 0.9410, and EUR/NOK was dragged 3 figures higher by the rise in EUR/SEK, reaching 11.45.