With Trump overseas the focus on politics is fading at the same time as the June 14 FOMC meeting comes into focus. The New Zealand dollar was the top performer while the euro lagged as it finally gave up some ground. Kuroda and Australian construction work are up next.
The US dollar caught a bid late in New York trade on Tuesday as Treasury yields moved higher. Yesterday’s speech from Brainard generally avoided monetary policy except for a nod towards soft core inflation in the Q&A. The thinking was that she would have said something more if she was planning to argue against a June hike. The same could be said about another dove in Kashkari. He said he wants to see more economic data before making up his mind.
The thinking in the market is as follows: If the dovish contingent at the Fed hasn’t been swayed yet, there’s no hope of swinging the moderates and hawks in time for June 14.
There is still time for a shift before the June 3 blackout period starts. A full slate of top-tier data is due before then and one to watch will be the FOMC minutes on Wednesday. They will likely skew hawkishly because they’re from May 3, when officials had more confidence about inflation and growth. But if the Fed wants to sneak in a hint about patience, it’s an opportunity.
Before that, the BOJ’s Kuroda speaks at 0000 GMT in Tokyo. Expectations are low for any kind of shift from the BOJ at the moment so any hint might enliven JPY trading.
For AUD traders, the Q1 construction work report is due at 0130 GMT. The consensus is for a 0.5% decline to compound a 0.2% drop in Q4 2016. Any miss is likely to move AUD as the RBA keeps a close eye on data.s
