North American Summary and Highlights 24 Jun

Overview - The USD consolidated in Europe before seeing renewed slippage in North America as Powell’s testimony, while cautious over easing, sustained hopes for lower rates should inflation avoid an expected acceleration on tariffs.
North American session
The USD lost some ground with Fed Chairman Powell, stating that while an expected tariff pass-through to inflation was keeping rates above neutral, it was possible inflation could come in less strong than expected, and that sustained hopes that easing could be seen by September. A fall in consumer confidence to 93.0 in June from 98.4 may also have contributed, this following declines in April house prices in surveys from FHFA and S and P Case-Shiller. In addition to Powell, Fed speakers Bostic, Hammack, Williams and Kashkari expressed caution towards easing, with Hammack particularly hawkish.
USD/CHF fell to .8050 from .8090 as EUR/CHF fell to .9350 from near .94. EUR/USD did advance to 1.1620 from 1.16 while EUR/GBP was stable near .8525 after slipping in Europe. USD/JPY slipped to 144.70 from near 145 but AUD/USD was little changed and USD/CAD more than fully reversed a dip below 1.37. Equities were positive and oil weaker with angry comments from Trump towards both Israel and Iran appearing to restore the ceasefire after some violations.
European morning session
The USD sell off in Asia with the decline in oil prices and reduction in global risk, did not follow through in Europe with the USD consolidating ahead of Powell’s semi-annual testimony, with dovish comments from hawk Bowman on Monday hinting at a July rate cut noted. Some traders are also focusing on NATO expected announcement of a hard military spending target of 3.5% of GDP by 2025, which is seen as EUR positive in geopolitical terms.