Morning Commentary & Currency Insights – May 24, 2018

The Dollar Index is down almost 0.3% this morning following yesterday’s Fed minutes as investors picked up on slightly dovish tones from the Fed. The notes indicated that another rate hike is reasonable (expectations are that they will hike at the June 13^th meeting), however the Fed would allow for inflation to carry above its target rate for a while. Trump is now pursuing new tariffs on automobiles imported to the US. This is ruffling the feathers of US allies like Japan and South Korea. With the US in the middle of NAFTA negotiations this could be a tactic to expedite talks with Canada and Mexico. EUR is quiet today as secondary data points out of Germany met expectations. Investors are still watching Italy as the political race continues to unfold. GBP was higher this morning on strong UK Retail Sales numbers (1.5% vs 0.1%). Ongoing concerns surrounding Brexit and May’s exit strategy continue to temper any Sterling gains.

Another relatively quiet day on the calendar with BoE’s Carney set to speak in London later today. To cap off the week, we have UK GDP (1.2% vs 1.2%), US Durable Goods Orders (-1.4% vs 2.6%) and the Fed’s Powell will be speaking on financial stability and transparency all due out tomorrow. Short term support and resistance remains 1.2814 and 1.3000 respectively, with RSI at 54 and the 200-day moving average residing at 1.2651.