USD mixed versus majors as markets hold ranges – Scotiabank

The US Dollar (USD) is trading mixed to a little higher overall. Trading remains relatively quiet and movement in the major currencies remains largely confined to recent ranges, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Markets are waiting for tariff news

"Stocks are trading mostly higher while bond markets are firmer; US 10Y yields are 2-3bps lower but Treasurys are lagging European bonds following the release of soft Eurozone GDP data. The Fed left its policy rate on hold yesterday and no-one was surprised. The policy statement did read a little hawkish on the face of it, with the reference to making progress towards the 2% inflation goal removed. "

"The Fed also said that unemployment had stabilized while the labor market remained solid. Markets moved a little on the apparent hawkish tilt implied by the dropped reference to inflation but Chair Powell downplayed the change, saying policymakers were just cleaning up the statement’s language. Regardless, a period of steady policy at least seems likely as the Fed sits back and assesses the economy and developments—including the Trump team’s plans—and the window for lower US rates this year appears to have narrowed a little."

"Powell noted there was no need to hurry on policy adjustment. It’s month end but that is not generating a lot of market interest, on the face of it. Markets may hold in ranges ahead of the weekend as investors await for news on whether the US will slap tariffs on Canada and Mexico."