North American Summary and Highlights 12 June
Overview - The USD fell sharply on a softer than expected CPI before seeing a partial correction after the FOMC.
North American session
The USD fell sharply on a softer than expected May US CPI, unchanged overall with ex food and energy up 0.2% and only 0.16% before rounding, weaker transport services the main surprise in the detail. USD losses extended through the morning, EUR/USD reaching 1.0850 from 1.0765, USD/JPY falling below 156 from above 157, and AUD/USD rising particularly sharply to .67 from just above .66.
The FOMC dots were more hawkish than expected for 2024, seeing only one 25bps easing rather than the three that was the case in March, though for both 2025 and 2026 they now see 100bps of easing rather than 75bps, and the statement saw modest further progress on inflation in recent months rather than a lack of it. The USD corrected off its lows, and that continued through and even after Powell’s press conference. USD/JPY recovered to 156.80 but EUR/USD held above 1.08 while AUD/USD remained resilient near .6660. In contrast, USD/CAD came close to pre-data levels.
European morning session
A generally quiet European morning ahead of the US CPI data saw some modest gains for EUR/JPY, which gained around 20 pips to 169.10 as both EUR/USD and USD/JPY edged up around 10 pips. There was also some mild strength in the scandis, with both EUR/SEK and EUR/NOK dropping a couple of figures.
The only notable news was the UK April GDP data, which was in line with consensus at flat on the month, but still up 0.7% on a 3m/3m basis. The April data showed a 0.2% rise in services and some strength in mining and utilities making up for 1.4% m/m declines in manufacturing and construction. EUR/GBP was little changed near 0.8430.