Fed speak and technical levels are the drivers – Scotia

By FXStreet FXStreet (Guatemala) – Analysts at Scotiabank explained that the North American markets are confronted with a generally stronger USD and softer equity and commodity markets.

Key Quotes:

“Yesterday’s FOMC post‐mortem by Fed policy makers suggested strongly that a rate increase remained a significant risk this year, despite the desire to hold fire at last week’s meeting.”

“Governors Williams, Bullard and Lockhart all suggested that the decision to keep policy unchanged was a close call. Note Governor Lockhart speaks again tonight after the market close (18.30ET).”

“The rhetoric has boosted US term rates and widened spreads back out in the USD’s favour, reversing the narrowing in yield differentials that followed the FOMC.”

“Eurozone‐US spreads are trading around 95bps this morning, near the recent peaks of 103bps—which was the biggest yield advantage the USD had held over the EUR since 2007. Wide or wider spreads will keep the USD supported broadly. It is a light day for data from North America so flows and tech‐ nical breaks will drive a lot of the movement today, we expect.”
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Source:: FX Street